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Agricultural Financing And Economic Growth In Nigeria
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The
problem of access to finance for agriculture is not solely as a result
of non availability of finance but it is caused by the reluctance of
credit providers to give out loans without a certainty of recovering the
loan. However, the banks are not to be blamed as they are not charity
organizations who disburse money without recourse to repayment; rather
they are in business to make profit from their lending operations.
Unfortunately, the situation makes farmers a neglected group in the
economy because they are not able to provide the adequate collateral
needed to secure bank loans. Because of the challenges facing farmers,
which have adverse effects on agricultural production, the government
thought it fit to act as an intermediary through the Agricultural Credit
Guarantee Scheme (ACGS) whereby the government stands as a guarantor
for agricultural loans in order to mitigate the risk involved in
agricultural financing.
Agriculture contributes immensely to the
Nigerian economy in many ways, namely; in the provision of food for the
increasing population; supply of adequate raw materials to a growing
industrial sector, a major source of employment generation, foreign
exchange earnings; and provision of a market for the products of the
industrial sector (Food Agricultural Organization, 2006). The agrarian
sector has a strong rural base; hence, generation concern for
agriculture and rural development. Support for agriculture is widely
driven by both government and the public sector, which has established
an institutional support in the form of agricultural research,
extension, commodity marketing, input supply, and land use legislation
to fast-track development of agriculture and rural economic empowerment.
Central Bank of Nigeria (2010) asserts that over the years, the
inability of this sector to expand and as well contribute meaningfully
to the growth of Nigerian economy was due to inadequate financing to
improve on the situation; that is, facilitating agricultural credit).
Also, the problem of agricultural development in Nigeria indicates that
efforts directed at achieving expanded economic base in the rural
farmers were frustrated by the scarcity of, and restrictive access to
loanable fund. One of the reasons for the decline in the contribution of
agriculture to the economy is lack of formal credit policy and paucity
of credit institutions which can assist farmers
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ABSRACT - [ Total Page(s): 1 ]The objective of this study is to find out the impact of agricultural financing on economic growth in Nigeria for the period 1981 to 2014. The study used endogenous components of Agricultural Credit Guarantee Scheme (ACGS) loans to Individual Farmers (LIF), loans to Informal Group (LIG), loans to Co-operative (LCO), and loans to Company (LCY) as explanatory variables to capture agricultural financing. Gross Domestic Product (GDP) at constant prices was used to proxy economic growth. Data for the ... Continue reading---
