AGRICULTURAL FINANCING AND ECONOMIC GROWTH IN NIGERIA

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Abstract

This study is on agricultural financing and economic growth in Nigeria. The total population for the study is 200 staff of ministry of agriculture Uyo, Akwa Ibom state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made supervisors,agronomists, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

CHAPTER ONE

INTRODUCTION

  1. Background of 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.