Abstract
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 of 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 (ײ).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.
TABLE
OF CONTENTS
APPROVAL i
CERTIFICATION ii
Dedication iii
Acknowledgement iv
Outline page v
Abstract 1
CHAPTER
ONE
INTRODUCTION
1.1Background to the
study. 2
1.2 Statement of Research
Problem. 2
1.3 Research Questions 3
1.4 Objectives of A Study. 3
1.5 Statement of the
Research Hypothesis. 3
1.6 Scope of A Study. 4
1.7 Significance of A
Study 4
1.8 Limitation of the
Study. 5
1.9 Definition of Terms 5
CHAPTER
TWO
LITERATURE
REVIEW
2.1 Theoretical Background. 7
2.3 Agricultural credit
policies 9
2.4 Bank
Credit for Agricultural Development. 11
2.5 The Role of
Parastatals in the Development of Agriculture in Nigeria.
11
2.6 Commercial
Agriculture Credit Scheme (CACS) 13
2.7 Bank of Agriculture
Limited (BOA). 16
2.8
Assessment of Banking Industries Development of Agriculture ,Future
Expectation. 17
2.9
Extension Research and Rural Development Strategies In Aid Of
Agricultural. 20
2.10 Importance of Credit
Facilities In Agriculture 21
2.11 Constraints of the
Nigerian Agricultural Sector 21
CHAPTER THREE
RESEARCH
METHODOLOGY
3.1 Introduction 23
3.2 Research Design 23
3.3 Population of the
Study 23
3.4 Sampling Design 23
3.5 Methods of Data
Collection 23
3.6 Method of Data
Analysis 24
3.7 Sources of Data. 24
CHAPTER FOUR
DATA
PRESENTATION AND ANALYSIS
4.1 Introduction 25
4.2 Educational level of
respondents
25
4.3 Level of Operation 26
4.4 The Analysis of roles of
financial institution in Agricultural Development 26
4.5 Test of Hypothes 31
CHAPTER FIVE
SUMMARY OF FINDING,
CONCLUSION AND RECOMMENDATION.
5.1 Summary of Findings 37
5.2 Conclusion 38
5.3 Recommendations 39
REFERENCES 43
APPENDIX 45
CHAPTER ONE
INTRODUCTION
1.1 Background to the study.
Nigeria is endowed with
natural resources, large fertile arable land, wide range of crops, and abundant
water resources amongst others. Despite its abundant natural resources it is
faced with a poor food situation. The poor food situation is traceable to the
decline in the agricultural sector. The problem of feeding is increasing by the
day. However, several efforts are being made to improve the standard of living.
Prior to the discovery of
petroleum in Nigeria agriculture used to be the highest foreign exchange
resource 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 standard. 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.
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 food In spite of growing urbanization, Nigeria is known
to be predominantly rural in nature and majority of 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).
1.2 Statement of Research Problem.
According to Anyanwu et
al (1997) 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 introduced 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 and productivity and
such program have at one time been implemented.
1.3
Research Questions
In recognition of the
aforementioned the attempt is made in this study to provide answers or
solution to the research
questions below
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?
4 What measures have been
taken in the past to redress the perceived slow growth rate of the agricultural
sector?
5 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?
1.4
Objectives of A Study.
The general objective of
the study is to determine the role of financial institution in agricultural development in Nigeria. The
specific objectives include
1. To examine and
evaluate the agricultural credit 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. To analyze the
measures and programs set by the government in a bid to enhancing the
agricultural sector.
4. To determine the
influence of these measures in 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.
1.5
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 utilization.
Hi: bank credit
facilities have been ineffective due to their improper implementations and
utilization and not due to the policies formulated
1.6
Scope of A 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
(NACRCD).
1.7
Significance of A 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 process. 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, 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.
1.8
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.
1.9
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: Subsistence type, diversified type, plantation type.
The subsistence type is
the production 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
cooperation.
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 foreign industries.
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
Cooperative 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.
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