IMPACT OF AGRICULTURAL CREDIT GUARANTEE SCHEME FUND ON AGRICULTURAL PRODUCTION IN NIGERIA, 1978-2011

ABSTRACT
Supporting smallholder farmers to play a greater role in food production and natural resource stewardship has been identified as one of the quickest ways to lift Nigerians out of poverty. Funding has been seen as a major problem militating against achieving this goal. It is argued that adequate credit facility could play an important role in enhancing agricultural productivity through the acquisition of latest technology, employment of skill manpower, promotion of agricultural research and commercial farming. In an attempt to mitigate the funding problem of the agricultural sector, the Federal Government of Nigeria has instituted several agricultural financing schemes. One of such schemes is the Agricultural Credit Guarantee Scheme Fund (ACGSF) which was established by the federal government in 1977 with the aim of enhancing commercial banks’ loans to the agricultural sector in Nigeria with focus on agro-allied and agricultural production in order to mitigate the risk associated with lending to the sector. The scheme is expected to stimulate agricultural production for both domestic consumption and export purposes but not much has been researched in this regard. This study strives to fill this important knowledge gap by examining the impact of Agricultural Credit Guarantee Scheme Fund (ACGSF) on total agricultural productivity in Nigeria, as well as on the four major subsectors (crop, livestock, forestry and fishery) of the agricultural sector in Nigeria.

The ex-post facto research design was adopted for the study and annualized data for a 34-year period, 1978-2011, were obtained from the Central Bank of Nigeria Statistical Bulletin. The multiple regression technique was used to estimate the five hypotheses formulated for the study. Aggregate agricultural production, crop, livestock, forestry and fishery productions were adopted as the dependent variables, while the independent variable was Agricultural Credit Guarantee Scheme Fund including some other relevant variables. The study also controlled for government expenditure in agriculture, foreign exchange rate and inflation rate. Results indicate that the Agricultural Credit Guarantee Scheme Fund (ACGSF) has a non-significant positive effect on aggregate agricultural output but significant positive impact on both crop and fishery subsector outputs. Nevertheless, the effects of the scheme on livestock output was non-significant and negative, while that of the forestry output was non-significant and positive. Thus, it is evident that the ACGSF plays a fundamental role in stimulating agricultural production in Nigeria. As a strategy to realize the optimal potential of farmers in enhancing agricultural performance, it is recommended that the Nigerian government continues the use of the credit finance from the ACGSF as an inducement to encourage farmers to put in their best efforts in agricultural production. The study has contributed to knowledge by using modified versions of earlier works to produce relevant results.

CHAPTER ONE
INTRODUCTION
1.1     Background of the Study
Agriculture represents one of the most important sectors of the Nigerian economy. It is particularly important with regards to its employment generation and contribution to gross domestic product (GDP) and export revenue earnings. Regardless of its rich agricultural resource endowment, however, the agricultural sector in Nigeria has recorded very low growth rate. Less than 50% of the country’s cultivable agricultural land is under cultivation. In addition to this, smallholder and traditional farmers who use undeveloped production techniques, with resultant low yields, cultivate most of this land (Manyong, et. al., 2005). The smallholder farmers are limited by various constraints among which access to credit according to Olomola (1990) is a major militating factor, against agricultural production and development in Nigeria. Problems associated with obtaining credit have been corroborated by different authors (Nto and Mbanasor, 2008; Olaitan, 2005; Okorie, 1998; Henri-Ukoha, et. al., 2011).

Credit delivery to the agricultural sector has been recognized as a major input in the growth of the sector in Nigeria. The decline in the contribution of the sector to the Nigerian economy has been blamed on the lack of a formal national credit policy and paucity of credit institutions, which can be beneficial to farmers and small and new business operators engaged in agriculture and agro-allied businesses (Rahji, et. al., 2010).

In Nigeria, credit has been recognized as an essential tool for promoting Small and Medium Enterprises (SMEs). About 70 percent of the population is engaged in the informal sector or in agricultural production. The federal and state governments in Nigeria have recognized that for sustainable growth and development, the financial empowerment of the rural areas is vital, being the repository of the predominantly poor in the society and particularly the small and medium enterprises (SMEs). If this growth strategy is adopted and the latent entrepreneurial capabilities of this large segment of the people is sufficiently stimulated and sustained then positive multipliers will be felt throughout the economy (Olaitan, 2006; Olowu, 2011).

The Federal Government of Nigeria has severally instituted various agricultural financing policies through schemes, programmes and institutions, aimed at improving agricultural....

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Item Type: Postgraduate Material  |  Attribute: 125 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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