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AGRICULTURAL FINANCING AND ECONOMIC GROWTH IN NIGERIA


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AGRICULTURAL FINANCING AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

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 study were obtained from the Central Bank of Nigeria (CBN) statistical bulletin of various publications, and regression analysis was carried out using IBM SPSS statistics. The t-test coefficients which attests to the significance of each of the independent variables of the study reveals that three of the parameters of the explanatory variables; ACGS loans to Informal Groups (LIG), ACGS loans to Cooperatives (LCO) and ACGS loans to Companies (LCY) counter apriori expectation with negative signs respectively. This implies that they do not have significant impact on economic growth (GDP). On the other hand, the variable of ACGS loans to individual farmers (LIF) as revealed by the regression result proved to have significant impact on economic growth (GDP). This indication is as a result of the variable’s conformity to the aprori expectation with positive sign in the analysis. It was recommended that more loanable funds should be made available to individual farmers (for commercial purposes), as ACGS loans to individual farmers can be used to formulate policies that can impact significantly on economic growth (GDP) in Nigeria. Further recommendation made was that, all economic stakeholders, monetary and regulatory authorities; both at the public and private sector of the economy should combine efforts and formulate policies aimed at improving financial inter-mediation, in the area of providing  adequate credit to farmers in Nigeria. This will eventually lead to the achievement of a favourable productive-based economy and viable growth of GDP in the country. The study has contributed to the body of knowledge by providing current information on agricultural financing vis-à-vis Agricultural Credit Guarantee Scheme (ACGS), with an extensive period of 1981 to 2014 (34 years). This study thus has implications for global economy particularly in the area of food production and living standard of nations.

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.

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

The role of financial capital as a factor of production to facilitate economic growth and development as well as the need to appropriately channel credit to rural areas for economic development of the poor rural farmers cannot be over emphasized. Credit is viewed as more than just another resource such as labour, land, equipment and raw materials (Rhaji, 2008). According to Shepherd (2002), credit determines access to all the resources on which farmers depend. Since banking cannot be separated from economic development, the banks (especially Deposit Money Banks) in the banking industry have been instrumental to various development schemes of Nigeria over the years. However, their performance in the facilitation of agricultural finance has not been adequately felt in the Nigerian economy; especially in the rural areas (farmers).

Also, in line with Nigeria’s quest for development; the erratic nature of events within the banking industry vis-à-vis agricultural financing is a cause for concern. This uncertain nature of access to credit by farmers in the agricultural sector could result to total loss of confidence in banks by citizens in the sector, as well as growth impediment in the overall economy of Nigeria. Questions are been asked concerning the role of agricultural financing, its contribution to the attainment of agricultural growth and development. It is therefore pertinent to empirically analyze agricultural financing and its economic implication (impact) on Nigeria with the aim of identifying measures to tackle the existing challenges and rebuild the lost glory of the agricultural sector.
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THE PROBLEM AND PROSPECTS OF COCOYAM PRODUCTION

ABSTRACT
It is a common practice in Nigeria and other West Africa Countries especially in area lying within the rainforest belt, with thick vegetation cover, the aim of management should be to avoid excessive and inadequate level of farming system and maintains sufficient for planting of cocoyam. The study therefore seeks to examine and appraise the problems and prospects of cocoyam production in our society, a case study of Ovia North East Local Government Area.

TABLE OF CONTENT

CHAPTER ONE

Background of the study

Statement of the problem

Research questions

Purpose of the study

Significance of the study

Scope of the study

Limitation of the study

Definition of terms

CHAPTER TWO

Historical Literature review

CHAPTER THREE       

Research methodology

Research design

Population of the study

Research instrument

Data collection

Statistical techniques

CHAPTER FOUR

Data presentation and interpretation of result

CHAPTER FIVE

Summary, conclusion and recommendation

REFERENCES

QUESTIONNAIRE

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND TO THE STUDY

Cocoyam (colocasia spp and xanthosoma spp) is grown in the tropical and sub-tropical regions of the world particularly in Africa for human nutrition, animal feed, and cash income for both farmers and traders (Onwueme and Chales, 1994). Cocoyam is vegetative propagated using the corms and to a lesser extent the cormels. As food for human consumption, the nutritional value parts of cocoyam is primarily caloric (Davis et al, 1992). The underground cormels provides easily digested starch; and the leaves are nutritious spinach like vegetable, which give a lot of minerals, vitamins and thiamine (Tambong et al, 1997).

There are two major types commonly grown in Nigeria namely; colocasia spp and xanthosma spp. In Nigeria, it is regarded as a major crop especially in X2 female headed household. Nigeria is one of the largest producers of cocoyam in the world contributing about 40% of total annual production okinpshectares of land out of the total arable land of 27,900.00 hectares under cocoyam production.

Cocoyam grows in association with other food and tree crops a system mostly practiced by subsistence farmers in Nigeria. The bulk of the production of cocoyam is in South East, Nigeria (Enyinnia, 2001). Cocoyam  is regarded as a major food crop in Nigeria especially in female headed households. Nwabuzor (2001) noted that cocoyam can be consumed in various forms when boiled, fried, pounded or roasted. It can also be processed into chips (“achicha”) which has a long shelf and provides food all year round especially during lean planting season (Asadu, 2006). Cocoyam leaves are also used as vegetable for preparing soup in various part of the world. There is a decline in the yields of cocoyam on the past few years. As population pressure on land continues to increases, the importance of cocoyam in ensuring household food security is given adequate recognition even through the present yield are still below expectation. This could be attributed to a lot of factors such as climate variation, drought, poor cultural practices among cocoyam growers, pest and diseases infestation (Ezenwu, 2010).

Despite the usefulness of cocoyam corms and leaves in human nutrition, its production and processing in Nigeria is faced with a lot of challenges. Some of these challenges are the alarming rate of land degradation and lack of improved varieties for commercial cocoyam and leaf production. Decreasing rainfall and poor soil have also been identified as some of the challenges processing of cocoyam in Nigeria (Osagoe, 2006). Therefore, this study was carried out with the broad objective of ascertaining strategies for improving cocoyam production and processing among women farmers in Edo State, Nigeria.

1.2    STATEMENT OF PROBLEM

In any human endeavour, there are bound to be some obstacle or hindrance in any of achieving exception to this general rule. Hence this research is designed to find out the problem and prospects of cocoyam production in Ovia North East Local Government Area of Edo State.

1.3    PURPOSE OF THE STUDY

The main aim of the study is to examine and appraise the problem and prospects of cocoyam production in our society, a case study of Ovia North East Local Government Area.

    To know the number of farmer producing cocoyam in the local government area.
    To know the type of production system.
    Identifying problem of cocoyam production

1.4    SIGNIFICANCE OF THE STUDY

It is a common practice in Nigeria and other West Africa countries especially in area lying within the rainforest belt with thick vegetation cover, the aim of management should be avoid excessive and inadequate level of farming system and maintains enough stock raw materials in period of short supply and anticipate price changes.

1.5    RESEARCH QUESTIONS

This study is centred on planning of cocoyam in our local government council (Ovia North East) with more emphasis on cocoyam production. Survey is a broad discipline that cannot be treated in full in this study. The researcher while trying to obtain information from respondents encountered certain drawback which hindered on farming system.

This investigation had a very limited for the study and they only limited time for the study and they only limited the work.

1.6    SCOPE OF THE STUDY

This study is centered on planting of cocoyam in our local government council (Ovia North East) with more emphasis on cocoyam production. Survey is a broad discipline that cannot be treated in full in this study. The researcher while trying to obtain information from respondents encountered certain drawback which hindered on farming system.

1.8    DEFINITION OF TERMS

Cocoyam: Cocoyam are herbaceous perennial plants belonging to the family araceae and are grown primarily of their edible roots, although all parts of the plant are edible. Cocoyam that are cultivated as food crops belong to either the genus colocasia or the genus xanthosoma and are generally comprised of a large spherical corm (swollen underground storage stem), from which a few large leaves emerge.

Problem: A problem is a road block in a situation, something that sets up a conflict and forces you to find a resolution.

Prospect: A prospect is the possibility that something fabulous will happen. After you graduate top of your class at Harvard, for example, your job prospects look great.

Production: The process of making or growing something for scale or use.
HOW TO GET THE FULL PROJECT WORK

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HOW TO RECEIVE PROJECT MATERIAL(S)
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Account Number: 0046579864
Bank: GTBank.

OR
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Account Number: 2023350498
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