IMPACT OF COMMERCIAL BANK ON FINANCING AND DEVELOPMENT OF AGRICULTURE IN NIGERIA (A CASE STUDY OF FIRST BANK OF NIGERIA PLC AND MINISTRY OF AGRICULTURE, OKO – OBA, AGEGE, LAGOS STATE)
ABSTRACT
This project work attempts to review the roles and impact of commercial banks on the financing of Agricultural Development in Nigeria.
A survey with a specific population was used to collect data from some selected banks and Ministry of Agriculture.
The data collected were analyzed using Chi – square (x2) sample percentage.
TABLE OF CONTENT
Title page i
Certification ii
Dedication iii
Acknowledgement iv – v
Abstract vi
Table of Content vii – x
CHAPTER ONE
Introduction 1
Background to the Study 1 – 4
Statement of the Problem 4 – 5
Purpose of the Study 5
Research Question 5 – 6
Research Hypothesis 6
Significance of the Study 6 – 7
Definition of Terms 7
Delimitation of the Study 8
Limitation of the Study 8
CHAPTER TWO
LITERATURE REVIEW 9
Conceptual Issues: Commercial bank credits and the agricultural sector 9
Commercial Banks Credits 9 – 11
The Agricultural Sector 12 – 13
Structure of Farming in Nigeria 13
Medium of large farmers 13 – 17
Smallholder farmers 17 – 18
Overview of Agricultural Finance in Nigeria 18 – 36
CHAPTER THREE
METHODOLOGY 37
Introduction 37 – 38
Sampling and Sampling Techniques 38 – 39
Instrumentation 38 – 39
Procedure for Data Collection 39
Method of Data Analysis 40 -41
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA 42
Introduction 42 – 43
Distribution of Respondents 42 – 46
Testing of Hypothesis 46
Hypothesis One 47 – 48
Hypothesis Two 49 – 50
Hypothesis Three 50 – 52
CHAPTER FIVE
Introduction 53
Summary 53 – 55
Conclusion 55 – 56
Recommendation 56 – 58
REFERENCES 59
APPENDIX 1: QUESTIONNAIRE 60 – 63
APPENDIX 2 64 – 72
CHAPTER ONE
1.0. INTRODUCTION
1.1. BACKGROUND TO THE STUDY
Like many other African countries, Nigeria is primarily agrarian with it’s abundant land and water resources. Despite the rapid growth of the oil industry over the years, agriculture still accounts for 40% of GDP and provides employment (both formal and informal) for about 100% of Nigerian’s 150 million people. Nigeria’s agriculture remains largely substances from rural farmers living on less than dollar per day, earned from farming less than one hectare (2.47acre).
Nigeria have diverse agro – ecological conditions that can support a variety of farming models to create it’s own green revolution. However, successive administrations neglected agriculture over the years and failed to diversify the economy away from overdependence on the capital intensive oil sector. Nigeria was once a large net exporter of agricultural products and the sector was the major foreign exchange earner before the advent of oil in 1970s. Nigeria is currently a huge not importer of agricultural product, with such imports exceeding and 3billion in 2010. the country has the potential to return to its previous position if adequate attention is given to agricultural growth policies, finance and provision of rural infrastructure.
The fact of the matter is most of the small holder farmers lack access to capital to acquire the needed inputs to increase their productivity and incomes and reduces their poverty. Farmers require credit to purchase seeds, fertilizers, herbicides and buy or rent mechanized equipment and related services. Nigeria agriculture policy recognizes the vital of agriculture finance in attaining the much desired green revolution. A major focus of the policy is to establish a system of sustainable agricultural financing scheme, programs and institutions that could provide micro and macro credit facilities for the small, medium and large – scale producers, processors and marketers. However, public expenditure on agriculture which serves as the bedrock of financing for the sector has constantly fallen short of recommendations. It is therefore not surprising that these policies have failed to achieve the set goals of food self – sufficiency, self – reliance, poverty reduction and rural development. Importantly, Nigeria’s agriculture is abysmally under financed. At a public forum in early 2011, the Government of the Central Bank of Nigeria (CBN) was quoted to have said “currently agriculture account for 40percent of the GDP, yet it receives only one percent of total commercial bank loan”. This is significantly below the level of other developing countries e.g. Kenya and Brazil which reportedly registers 6percent and 18percent respectively. The Nigeria agriculture public expenditure review.
- STATEMENT OF THE PROBLEM
Nigeria has immense agricultural potential we have 84 million hectares of arable land but only cultivate 40% and 26s billion cubic meter with two of the largest river in Africa. Akinwunmi .A. (2013) we have a cheap labour force to support agriculture intensification. Despite all this abundant material endowment the sectors have facing with a lot of problem such as low management capacity of farmer. Inadequate funding of public agricultural financing institutions the portfolio of fund deployed to agricultural financing among Nigerian commercial banks is less than one percent of aggregate investable funds mostly commercial banks do not have clearly defined structure for the administration of agricultural finance and there is general lack of interest among commercial banks because agriculture finance in Nigeria is larger term (7years) finance and not what they do.
- PURPOSE OF THE STUDY
- This study is to find the commercial scheme to the development Nigeria of agriculture sector.
- To examine the role of agriculture sector toward manufacturing productivity.
- To examine the portfolio of fund deployed to agricultural development.
- To examine the impact of commercial banks on agricultural development.
- RESEARCH QUESTION
- Is commercial banks contributing financial to the development of agriculture.
- To what extent has commercial banks helped in the development of agriculture education.
- Is commercial bank providing fertilizer to enhance agriculture productivity?
- RESEARCH HYPOTHESIS
- There is no adequate financial support from commercial banks to agricultural development.
- Agricultural training is adequate promotes by the commercial bank.
- There is contribution from commercial banks in terms of fertilizer to agriculture productivity.
- SIGNIFICANCE OF THE STUDY
This study is significance because it will enhance of knowledge about the roles played by commercial banks in the development of agricultural sector in Nigeria. It is believed by all that commercial banks has a role to play in the development of agricultural productivity. Also realized that agriculture occupies a priority status in Nigeria as the sector serves as the key driver of growth, wealth, creation and poverty reduction for a large portion of population. It is the leading economic activity in the country. Contributing about 40percent of employment in 2010.
The growth and development of this country also depend on the support rendered to agricultural sector.
- DEFINITION OF TERM
Commercial banks: Essang and Olagide (1974) defined a commercial bank as a monetary institution owned by either government or private business man for the purpose of profit.
Agriculture stamp (1970) defines agriculture as the cultivation of land and rearing of livestock.
- DELIMITATION OF THE STUDY
This study is delimited to selected banks in Lagos State. The selection is restricted to two commercial banks in Lagos State.
- LIMITATION OF THE STUDY
The major limitation that is apparent in this project is that of time, finance sample.
It is the interest of the researcher to administer the instrument in more commercial banks in Lagos State but because of the financial constraints and limited time on the part of the researcher.
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