ABSTRACT
This research thesis investigated the effect of commercial bank loans and advances on the performance of the agricultural sector in Nigeria. In order to achieve the purpose of the study, three (3) hypotheses were formulated and data was collected from the Livestock production, Crop production and Fish production subsectors of the agricultural sector of for a period of thirty four (34) years covering 1981 to 2014 from the Central Bank of Nigeria (CBN) Statistical Bulletin 2015. The data collected analyzed using simple regression and correlation analyses on Statistical Package for Social Sciences (SPSS) version 21. From the data analyses, the following findings were made: A positive and significant relationship between Livestock Production and bank loans and advances. Our findings also showed that there is a positive and significant relationship bank loans and advances and crop production in Nigeria. Finally, our findings showed a positive and significant relationship between bank loans and advances and fish production in Nigeria. Based on the findings, we conclude that provision of loans and advances by commercial banks has significantly improved livestock production in Nigeria. We also conclude that increased bank loans and advances from commercial banks have positively impacted on the performance of crop production in Nigeria. Finally, we conclude that the provision of loans to fish production has boosted the productivity and performance of the sector. Given our finding and conclusions, we make the following recommendations: The federal government should make policies that will incentivize commercial banks to increase funding provided for agro-based production in Nigeria. Other sources or avenues for agricultural loans and advances should be made available especially for those farmers who may not be able to meet up with the stringent requirements of the commercial banks. Training and awareness programmes should be organized for farmers and others in the industry on the availability of funds and how to meet the stringent requirements demanded by commercial banks.
BACKGROUND TO THE STUDY
Agricultural credit is the loan extended to farmers for the production, storage, processing and marketing of farm products. Agricultural credit is sometimes referred to as farm credit. Farm credit plays a crucial role in agricultural development as it enables farmers reap economies of scale, venture into new fields of production, employ new technologies and empower them to provide utilities for a widening market (Ayegba & Ikani, 2013).
Agricultural credit have a secondary spillover effect on nonfarm household through input, labour and output linkages. According to Nzotta (1999) agricultural credit reactivates, expands and/or modernizes all types of agricultural enterprises which are considered economically feasible and desirable to the achievement of stated economic goals of self sufficiency in agricultural production.
Furthermore, (Qureshi, et al 1992) reports that such credit removes financial constraints faced by farmers as it provides incentives to adopt new technologies that would otherwise be more slowly accepted. Thus the availability of credit enables farmers to switch quickly to new technologies which enable the achievement of rapid productivity and growth.
Since suppliers of credit/loan are in business for profit and will only lend to credit worthy sectors and knowing the positive role played by agricultural credit on food production, consumption and agricultural inputs, the Federal Government of Nigeria decided to established the agricultural credit guarantee Scheme (ACGS) with capital base of three billion Naira (N3 billion) to guarantee credit extension to Nigerian farmers (Ogar et al (2014).
The difficulties in accessing loans from deposit money banks has limited the ability of the sector to expand it production, used modern technologies, provide employment opportunities to the teeming population and contribute to the growth of the Nigerian economy (Ogar, 2015). To solve these problems, many policy dimensions have been evolved meant to increase the funding to the agricultural sector including the requirement of banks to play pivotal roles in providing cheap credit to the sector’s operators.
However, deposit money banks have not fully complied with this policy requirement as there are still reports of the unwillingness of the banks to grant credit to the sector’s operators. Furthermore, where credits are granted, the interest charges are often too high. Other problems associated with the access to deposit money banks’ credit by the agricultural sector include: excessive paper work, requirement for collateral securities and the fear of default in the payment .............
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY 1
1.2 STATEMENT OF RESEARCH PROBLEM 5
1.3 PURPOSE OF THE STUDY 6
1.4 STATEMENT OF RESEARCH QUESTION 7
1.5 RESEARCH HYPOTHESES 7
1.6 SIGNIFICANCE OF THE STUDY 8
1.7 SCOPE AND LIMITATION OF STUDY 9
1.8 ORGANIZATION OF STUDY 9
1.9 DEFINITION OF TERMS 11
CHAPTER TWO
REVIEW OF RELEVANT LITERATURE
2.0 INTRODUCTION 13
2.1 THEORETICAL FRAMEWORK 14
2.2 CONCEPTUAL FRAMEWORK 17
2.2.1 Commercial Banks 17
2.2.1 Agric Sector in Nigeria 20
2.3 AGRIC SECTOR PERFORMANCE & THE ECONOMY 23
2.4 REVIEW OF RELEVANT EMPIRICAL LITERATURE 26
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION 32
3.1 RESEARCH DESIGN 32
3.2 SAMPLE PROCEDURE & DATA COLLECTION METHOD33
3.3 OPERATIONAL MEASURES OF VARIABLES 34
3.5 DATA ANALYSES TECHNIQUES 36
3.5.1 MODEL SPECIFICATION 36
BIBLIOGRAPHY 38
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.0 INTRODUCTION 38
4.1 DATA PRESENTATION 39
4.2 DATA ANALYSES AND HYPOTHESES TESTING 45
4.3 DISCUSSION OF FINDINGS 50
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 INTRODUCTION 52
5.1 SUMMARY OF FINDINGS 53
5.2 CONCLUSIONS 54
5.3 RECOMMENDATIONS 55
BIBLIOGRAPHY 56
APPENDICES 60
Reference code: C092
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Reference code: C092
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