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Agricultural Financing And Economic Growth In Nigeria
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CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Finance
for agricultural development has an increasing role in contemporary
times. Finance affects economic growth, stagnation or even decline in
any economic system. However, a growing concern has developed over time
regarding the need for effective access to credit facilities for farming
purposes. The Nigerian government recognizes that finance is an
essential tool for promoting agricultural development because the
agriculture sector is one of its main sources of sustainability. Access
to finance for agriculture is an incentive for increasing the
agricultural sector’s performance; it stimulates productive growth, and
supports the survival of small and new enterprises. Access to finance
increases the average inputs of labour and capital which has positive
effects on production output. Irrespective of the benefits that can be
derived from financing agriculture, there is an inherent risk of loan
defaults amongst farmers, which discourages banks from lending to
farmers.
According to Beck and Demirguc-Kunt (2006), specific
financing tools can be useful in facilitating greater access to finance.
The government of Nigeria, being fully aware of the need for
progressive policies, has introduced various initiatives and policies
dating back to the 1970s to attract finance to enhance agriculture
productions. Such policies have mainly been in the form of specialized
agriculture lending, the supply of credit finance by the commercial
banks in favour of the agriculture sector and through various
programmes. While some of these efforts have failed, the operation of
the remaining leaves one to wonder if they are actually achieving their
intended objectives as rural poverty is on the increase and yet a large
portion of the population is engaged in agricultural activities.
CHAPTER ONE -- [Total Page(s) 3]
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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---
