The Project File Details
This study examined the role of financial institutions in agricultural development. A case study of Nigeria Agricultural Cooperative and Rural Development Bank, with a view to make useful suggestions and recommendations as way of enhancing the development of agricultural sector. The population for the study includes large and small scale farmers and the sampling method adopted for the study is the stratified random sampling in order to ensure adequate representation of the population. In order to achieve the objective of making useful suggestions that would improve the agricultural sector, a number of hypotheses were made and tested. Samples of one hundred and eighty responses were collected and analyzed using the chi-square (×²) and tested method. It was discovered that bank credit loan scheme is making some impacts in lending loans to farmers. The result also showed that farmers prefer informal to the formal sources of finance mostly because of the demand of formal institutions that farmers most present collateral security. Finally, the study also indicated that the problems facing agricultural financing.
Title page – – – – – – – – – i
Approval page – – – – – – – – ii
Dedication – – – – – – – – iii
Acknowledgement – – – – – – – iv
Abstract – – – – – – – – – v
Table of Contents – – – – – – – vii
CHAPTER ONE – – – – – – –
INTRODUCTION – – – – – – – – 1
1.0 Background of the Study – – – – – 1
1.1 Statement of Research Problem – – – – 3 1.2 Objective of the Study – – – – – 5 1.3 Scope of the Study – – – – – – 6
1.4 Significance of Study – – – – – – 6 1.5 Statement of Research Hypothesis – – – 8
1.6 Sources of Data – – – – – – – 9
1.7 Limitation of Study – – – – – – 9
1.8 Definition of Terms – – – – – – 10
References – – – – – – – 13
CHAPTER TWO – – – – – – – –
LITERATURE REVIEW – – – – – – – 14
2.1 Theoretical Background – – – – – 14
2.2 Sources of farm Credit – – – – – 19
2.3 Agricultural Credit Policies – – – – – 20
2.4 Features of the Agricultural Credit Guarantee Scheme 22
2.5 Bank Credit for Agricultural Development – – 24
2.6 The role of parastatals in the Development of Agriculture
In Nigeria – – – – – – – 26
2.7 Nigerian Agricultural Cooperative and Rural Development
Bank (NACRDB) – – – – 31
2.8 Assessment of the Banking Industry’s Development of
Agriculture and Future Expectation – – – 35
2.9 Extension Research and Rural Development strategies In aid
of agricultural development in Nigeria – – 41
2.10 Importance of credit facilities in Agriculture – – 45
2.11 Constraints of the Nigeria Agricultural sector – 47
Reference – – – – – – – – 50
CHAPTER THREE –
RESEARCH METHODOLOGY – – – – – – 52
3.1 Introduction – – – – – – – 52
3.2 Research Design – – – – – – 52
3.3 Population of the study – – – – – 52
3.4 Sample design – – – – – – – 53
3.5 Methods of data collections – – – – 53
3.6 Method of data analyses – – – – – 54
References – – – – – – – – 55
4.0 DATA PRESENTATION AND ANALYSIS – – – 56
4.1 Test of hypothesis – – – – – – 67
Reference – – – – – – – – – 76
SUMMARY RECOMMENDATION AND CONCLUSION – 77
5.0 Summary and Conclusion – – – – – 77
5.1 Summary of Findings – – – – – – 78
5.2 Conclusion – – – – – – – – 80
5.2 Recommendations – – – – – – 82
5.3 General Policy Recommendations – – – 84
5.4 Prospects of agricultural financing in Nigeria – – 86
Bibliography – – – – – – – – 89
BACKGROUND TO THE STUDY
Nigeria is endowed with natural resources, large fertile farmland,
wide range of crops, and river amongst others. Despite its
abundant nature resources it is faced worth a poor food situation.
The poor food situation is traceable to the decline in the
agricultural sector. The problem of feeding and provision of
natural resources is increasing by the day. However, several
efforts are being made to improve the standard.
Prior to the discovery of petroleum in Nigeria agriculture used to
be the highest foreign exchange resources earner and its
contribution to gross domestic product GDP has been estimated
to about 62.63% in 1960, 48.08% in 1970, and 20.63% in 1980.
Recently due to the growing awareness of the role of agriculture,
the various governments have intensified efforts aimed at
transforming from its present subsistence level to a market
oriented production. One of those efforts was the ban made on
importation of agricultural products like palm oil, maize and rice.
This was done to encourage improvements on our production
Due to the fall in the level of production from decade to decade,
the country could no longer feed the large population, provide
raw material for domestic industries, engage in export of
agricultural produce and employ the labor force of the country
despite the abundance of human and material resources.
In spite of growing urbanization, Nigeria is known to be
predominantly rural in nature and majority of the population is
dependent directly or indirectly on agriculture for their livelihood.
Though, the Nigerian agriculture is characterized by low farm
income, low level capacity to satisfy the fond needs of the
country, due to the outdated and primitive techniques of
production, it is still the mainstay of the nation’s economy.
Measures and program setup to upgrade the Agricultural sector
involve the construction and reformation of the whole structure
of the agricultural sector by the creation of appropriate
institutions and public services. This would help strengthen the
economic position of the dependent farmers. Examples of such
measures are National Accelerated Food Production Project
(NAFPP), Structural Adjustment Program (SAP), Nigeria
Agricultural Cooperation and Rural Development Bank (NACRDB).
STATEMENT OF RESEARCH PROBLEM.
According to Anyanwu Etal (1997:14) ‘’the agricultural sector has
been recognized for a long time as an important sector to
Nigerian economy and development is one of the crucial
requirements for the overall economic growth. He noted further
that the decline in agricultural activities might appear natural in
any development process; it is obvious that in Nigeria agricultural
activities would remain the most important single sector for some
time to come. He emphasized that in the past, development
planners have introduce programs such as national accelerated
food production project (NAFPP), green revolution programs
(GRP), in search for all appropriate technique in order to increase
farm output an d productivity and such program have at one time
In recognition of the aforementioned that attempt is made in this
study to provide answers or solution to the research problems
1. What are the reasons for continuous fall or decline in the
production level of the agricultural sectors of the Nigerian
economy? 2. What actions can be taken to upgrade the current
production level of the agricultural sector? 3. What effect does the decline in agricultural sector have on
the human resources of the economy?
What measures have been taken in the past to redress the
perceived slow growth rate of the agricultural sector?
How and to what extent does the performance and
commitment exhibited by financial institution in general,
Nigeria agricultural cooperation and rural development bank
(NACRDB) in particular in terms of providing financial
support influenced the activities of agricultural sector?
OBJECTIVES OF STUDY.
The objectives of the study are to determine the role of financial
institution in agricultural development in Nigeria. This will
1. To examine and evaluate the agricultural create it granted
the farmers in recent years.
2. To ascertain the effectiveness of credit granted by Nigeria
agricultural cooperation and rural deve3lopment bank
(NACRDB) in the achievements of the pre-planned objectives
of the agricultural sector.
3. The study seeks to analyze the measures and program set by
the government in a bid to enhancing the agricultural sector.
4. To determine the influence of these measures at
accelerating the growth rate of the agricultural sector.
5. To establish and verify ways by which the agricultural sector
can be improved in the future.
The study seeks to achieve the above system aims or objectives.
SCOPE OF THE STUDY.
With the aim of examining how the financial institutions influence
the activities of agricultural sector, through their credit policies
and farm credit system, programs that have been established to
review the agricultural sector would be analyzed. A lot of sources
for farm credit have been and a number of them have failed to
perform their pre-planned functions. An example of such scheme
is the Nigeria local development board (NLDB).
Our point of focus in examining institution program and
scheme setup to upgrade the agricultural sector would be on
Nigeria agricultural co-operative and rural development bank
SIGNIFICANCE OF THE STUDY.
The agricultural sector of the Nigeria economy like any other
sector of the economy cannot function without fund. Unlike the
other sectors of the economy, agricultural sector can guarantee
repayment of loan borrowed or collected only after a long period
of time. This is because of the slow nature of the production
However, this has acted as a hindering factor to giving out
loan to the agricultural sector by financial institutions. If this
continues in its current path, the continuous lack of fund would
lead to the eventual collapse of agricultural activities.
The problem of lack of fund and credit facilities in the
agricultural sector has been chosen because the persistent
shortage of fund would lead to a fall in the production level of the
agricultural sector, the agricultural sector whose importance
cannot be over stated.
Nevertheless, there would be some beneficiaries in this
study which will include the government, financial institutions,
large and small scale farmers as well as the general public.
STATEMENT OF THE RESEARCH HYPOTHESIS.
This study would be guided by the following hypothesis;
i. Ho: the agricultural down drain cannot be curbed through
effective bank credit.
Hi : the agricultural down drain can be curbed through
effective bank credit.
ii. Ho: bank credit and financial facilities are not made available
by development bank to farmer.
Hi: bank credit and finance facilities are made available by
development bank to farmers.
iii. Ho: bank credit facilities have been ineffective due to their
policies formulated and not their implementations and
Hi: bank credit facilities have been ineffective due to their
improper implementations and utilization and not due
to the policies formulated.
SOURCES OF DATA.
For this study, data and information from different sources
would be required to test the research hypotheses and solve the
research problem. Content that would be analyzed in the process
of data generation include books, newspapers, magazines,
journals, minutes of meetings, publication of any involved body as
well as other media for recording historical data. The sources
listed above would provide primary and secondary data.
LIMITATION OF THE STUDY.
Some factors may limit the level of accuracy and reliability of
this study. Such factors include. i. Difficulty in obtaining data. ii. Low response rate from involved parties.
In the absence of the above mentioned limitations, all other
errors and omissions are entirely those of the researcher.
DEFINITION OF TERMS.
i. AGRICULTURE: This can be defined as the growing of crops
and rearing of animals for human consumption. Agriculture
involves live stock, forestry, wide life and fisheries as well as the
production of crops like cocoa, palm product, groundnut, cotton
and rubber. Historically, the Nigerian agriculture can be
categorized into three. They are The subsistence type. The diversified type. The plantation type.
The subsistence type is the production type done mainly for
human consumption with little or no surface.
The diversified type is the production type that is done
beyond individual consumption or domestic level.
The plantation type although have not made any impact in
the Nigeria agriculture, it accounts for a small amount of total
Nigeria agricultural output. It involves the use of improved
modern techniques and it is run in the state by their development
ii. AGRICULTURAL SECTOR: The agricultural sector is one of the
sectors of Nigeria economy… it is the sector responsible for the
provision of food supply and raw materials for domestic and
iii. FINANCIAL INSTITUTION: These are organization owned
either by individual, group or persons, state or country as a whole.
Financial institutions are established mainly for saving money
(deposit) for their customers and providing for such deposit and
when needed and also the granting of credit facilities to their
customers based on the credit worthiness of such customers.
iv. NIGERIA AGRICULTURAL CO OPERATIVE AND RURAL
DEVELOPMENT BANK (NACRDB): It is a body charged with the
duty of granting credit facilities to individual farmers as well as
the group farmers for the purpose of fueling their farming
activities. It was previously known as Nigeria agricultural
cooperative bank (NACB) and became Nigeria agricultural
cooperative and rural development bank (NACRDB) after merging
with the defunct people’s bank of Nigeria and family economic