The Roles of Banking Industry in the Agricultural Sector of Nigerian Economy
CHAPTER ONE
OBJECTIVE OF THE STUDY
The main objective of this study is to assess the roles of banking industry in the agricultural sector of Nigerian economy. Specifically the study tends to be achieving the following objectives.
- To access the scope and achievements as well as highlight new role ofNigerian Banking Sector to
- Identify the inherent problems of agricultural financing which have hindered the smooth flow of credit from banks to
- To offer solutions to identified
CHAPTER TWO
THEORETICAL REVIEW
AGRICULTURAL DEVELOPMENT
Agricultural development is most desirable in almost every nation of the world, whatever the stage of the economy of the nation.
According to Todaro (1977) agricultural development occurs when substantial productive capacity and high output per worker permits a very small number of farmers to feed the entire nation.
Soyambola tomori (1979) has more broad conception of agricultural development to him, the physical requirements for agricultural development may generally be considered to be improved farming techniques with proper and adequate use of such inputs as fertilizers, pesticides, improved seeds, water storage facilities, marketing and transportation.
However, the adoption of these innovations techniques and inputs used by large number of farmers depends on their willingness and ability to do so.
From the above, it could be said that for, agricultural development to take place, support is need from other sectors of the economy since it needs improve seeds, improved varieties of livestock, fisheries etc. inputs like fertilizers, pesticides, machinery and equipment and implements all of which are produced outside agriculture.
Obasanjo (1976) summarized in four ways how greater productivity and output contribute to an economy’s development.
- By supplying food stuff and raw materials to other expanding sectors of the
- Providing an investable surplus of saving and taxes to support investment in another expanding
- Selling for cash a marketable surplus that will raise the demand for rural population for products of the expanding sector.
- Relating the foreign exchange constraint by earning foreign exchange through exports or by saving foreign exchange through sub
Local consumption and export on the part of the government, emphasis was placed on research extension, marketing and pricing of export based crops to the neglect of food crops subsector. In general, the performance of agricultural sector during this ear was satisfactory as it fulfilled its major roles by making food importation less pronounced, but generated a foreign exchange through the balance of payments.
CHAPTER THREE
RESEARCH METHODOLOGY
METHODOLOGY
The methodology to be adopted is multiple regression analysis, employing ordinary least square (OLS) technique.
The other technique is adopted because of the following reasons,
- The parameter estimates obtained posses optimal properties of un- biasedness, minimum variance, linearity
- It is BLUE (i.e. best linear unbiased estimator).
- The computational procedure of OLS is fairly simple as compared with other econometric
- OLS is an essential component of most other econometric techniques (Kontsoyiannis 1997).
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF RESULT
REGRESSION RESULT
MODELLING RAGDP BY OLS
CHAPTER FIVE
SUMMARYOF FINDINGS, RECOMMEDATIONS AND CONCLUSION
SUMMARY FINDINGS
This research work was carried out to known the impact of the banking industry in financing agriculture in Nigeria using a time series data within 1986 to 2019.
The past shows that some efforts have been made to finance agriculture in Nigeria but the effect has not been felt as the sector is dominated by the oil sector. The agricultural output in Nigeria is being affected by the regulation of the real exchange rate by the credit institution, since farmers find it difficult to exchange foreign currency into domestic currency.
The study identified some problems that have constrained reduction in agricultural productivity outside real exchange rate. This include using cost of farm input caused by prolong inflation in the economy. The implication is that there is inadequate supply and delivery of farm input, shortage of capital low rate of technology, environmental hazards, processing and storage facilities, land and labour constraints etc. However, the result of the regression shows that there is a positive change in banks credit to farmers and Real interest rate to change the agricultural output. On other hand, banks credit to farmers and the Real interest rate have a positive relationship with agricultural output in Nigeria economy by
- Increasing the technological input of farmers
- Removing the red tapism in the acquisition of credit land parcelization
- It has helped banks to manage risk murder to speed
- Flexibility yield and proper policies.
- It hashelped in providing adequate extension services, agricultural inputs, storage facilities, marketing information and efficient marketing arrangement, infrastructures such as feeder roads efficient, efficient power supply and institutional
- The bank credit given to farmers has helped farmers to transform her agricultural output into industrial input which enable her to meet the rising expectation of her people and to correct the social and economic
imbalance created by the top sided developments between the rural and urban areas which have encourage the youths and others to migrate from rural areas.
RECOMMENDATION
Based on the above findings and existing literature on the loans and agricultural productivity, and from the present research, it is obvious that the real Interest Rate and Banks Loan have a significant impact on agricultural output in Nigeria. In the high of these, the following recommendations are proffered:
- Real Interest Rate as it influence needs policy should be properly managed and periodically reviewed so as to promote the growth of the agricultural
- Real Interest Rate determination is a function of monetary authority like Central Bank of Nigeria; therefore, monetary policy should be promoted towards enhancing agricultural output in
- International bodies sometimes give out loans to finance agriculture; for such loans to be properly utilized, they have to be channeled in such a way that the impact of such loans has to be felt by the peasan When such loans are taken, they should be used towards the achievement of specific objectives. And such loans should be seriously monitored. Since agriculture is an important sector of the economy, more loans should be allocated to its development and implementation.
- TheCentral Bank should give adequate directives to the Banking Sector mandating them to give out loans to farmers at affordable interest rate and collateral
- The government on its own part should pass a bill to Agricultural Banks,which will mandate them to give out loans to farmers without unnecessary
- Various governments should encourage formation of farmer‟s cooperativesocieties at local level, so as to ensure adequate funding for agriculture which will enhance growth of the
CONCLUSION
The potential increase on the effect of agricultural financing based on production does not exist, but the agriculture is yet to attain its full position and fulfill its role, especially in the production of basic agricultural commodities.
Furthermore, it is important to emphasize here that the role of credit in Nigerian agricultural development cannot be over emphasizes.
Again, the loan given out by the international and local bodies does not reach the real farmers, rather it goes to the business men who resell them and use the loan to improve on their business.
Therefore, a policy stability and long-term planning should be given adequate attention in the policy design processes. The nature of agricultural practices and changing of domestic market into word market should be addressed. The economic situation of Nigeria requires that a regular policy review process should be instituted. By so doing, Nigeria will achieve its „7 Points Agenda‟ aimed at guaranteeing a better life for all Nigerians and solve the present frightening –food crisis.
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