ABSTRACT
In
most agrarian economies like the type that exists in Nigeria, agricultural
production provides the needed fulcrum upon which a sustainable development
would blossom. Being the main source of food for most of the population, till
date, agricultural production remains the mainstay of the Nigerian economy. It
provides the means of livelihood for most of the population, a major source of
raw materials for the agro-allied industries and a potent source of the much
needed foreign exchange. However, inadequate credit (among other factors) to
the agricultural sector led to the downward trend observed in agricultural
productivity in Nigeria. To avert such trend, the Federal Government of Nigeria
established the Agricultural Credit Guarantee Scheme Fund (ACGSF) in 1977 to
assist farmers have access to credit as to improve agricultural productivity.
The setting up of the ACGSF was predicated on the unwillingness of commercial
banks to give loans to smallholder farmers for reasons of high default rate on
loan repayment and, therefore high risk, of repayment. In the course of the
fund’s operations, a number of problems have been identified as militating
against its smooth performance; some of which affected the amount of credit
granted to the various agricultural subsectors. Therefore, this study sought to
examine (i) the impact of Agricultural Credit Guarantee Scheme Fund on crop
output in Nigeria; (ii) the impact of Agricultural Credit Guarantee Scheme Fund
on livestock output in Nigeria; (iii) the impact of Agricultural Credit
Guarantee Scheme Fund on fisheries output in Nigeria; and (iv) the impact of
Agricultural Credit Guarantee Scheme Fund total fund granted on Agricultural
output and productivity in Nigeria. The ex-post facto research design
was adopted to enable the researcher make use of secondary data and determine
cause-effect relationship during the period, 1978-2008. The Ordinary Least
Square (OLS) estimation technique was adopted, using SPSS statistical software
to test the hypotheses, where Total Agricultural Credit Guarantee Scheme Fund
(TACGSF), Agricultural Credit Guarantee Scheme Fund to crop production
(ACGSFCP), Agricultural Credit Guarantee Scheme Fund to livestock (ACGSFLSP)
and Agricultural Credit Guarantee Scheme Fund to fisheries
(ACGSFP) were used as the independent variables while Agricultural Production
(AP), Gross Domestic Product Agricultural Crop Production (GDPACP), Gross
Domestic Product Agricultural Livestock Production (GDPALS) and Gross Domestic
Product Agricultural Fisheries Production (GDPAFP) were used as the dependent
variable. The study found that Agricultural Credit guarantee scheme fund for
crop production, livestock production and fisheries had significant positive
impact on crop, livestock and fisheries productivity in Nigeria for the period
of the study and also, the total agricultural credit guarantee scheme fund had
significant positive impact on agricultural output in Nigeria. The study
therefore recommends that stakeholders in the scheme viz: the farmers, lending
institutions and government must show greater commitment and dedication for the
scheme to achieve its laudable objectives.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Agricultural
Production in Nigeria is progressively on the decline in terms of its
contribution to the Gross Domestic Product (GDP) as well as satisfying the
country’s food requirement, despite the fact that about 70 per cent of the
population engage in agriculture, thus Nigeria agricultural sector is unable to
fulfill its most basic and traditional role of being the source of food for the
nation, therefore the food import has continued to rise (Odigbo, 2000). There
is a growing recognition by the Nigerian farmers of the effect of improved
inputs and new technologies on agricultural yield. The use of these inputs and
the adoption of high yielding techniques have given rise to an increased need
for agricultural credit since majority of Nigerian farmers are small-scale
farmers and are often limited by unfavorable economic, social, cultural and
institutional conditions (Olubiyo and Hill, 2000). Insufficiency of capital has
been a major constraint to agricultural development (Agu, 1998) in order to
improve agricultural production modern farm inputs such as fertilizers,
improved seed, feeds and plant protection chemicals and agricultural
machineries are needed over the hoe and machete technology. Most of these
technologies have to be purchased, yet very few farmers have the financial
resources to finance such purchases (Adeniji and Joshua, 2008).
Agriculture
contributes immensely to the Nigerian economy in various ways, namely, in the
provision of food for the increasing population; supply of adequate raw
materials (and labour input) to a growing industrial sector; a major source of
employment; generation of foreign exchange earnings; and, provision of a market
for the products of the industrial sector (Okumadewa, 1997; World Bank, 1998;
Winters et al., 1998; FAO, 2006). The agrarian sector has a strong rural
base; hence, concern for agriculture and rural development become synonymous,
with a common root (Eze et. al., 2010).
Eze
et. al. (2010) posit that support for agriculture is widely driven by the
public sector, which has established institutional support in form of
agricultural research, extension, commodity marketing, input supply, and land
use legislation, to fast-track development of agriculture. These are aside the
Private sector participation is not limited to local or foreign direct and
portfolio investment financing, but also to sponsorship of research and
breakthrough on agricultural issues in universities, capacity building for
farmers and, most importantly, the provision of financing to farm businesses.
International governmental and
At
independence in 1960, Nigeria’s agriculture was characterized by high
production achieved by mobilizing small scale farmers, provision of
infrastructure (roads, railways) geared towards developing crops required for
export, and foundation laid for research and export. After independence,
government interventions in agriculture were realized within the framework of
development plans and annual budgets. Food was abundant and demand met without
resort to import (Okoro and Ujah, 2009).
Using
a broad classification, the Central Bank of Nigeria (CBN) and National Bureau
of Statistics (NBS) document the import and export agricultural products in the
following categories – live animals and animal products; vegetable products;
animal and vegetable fats and oil; foodstuff, beverages, spirit and vinegar,
tobacco; and raw hides and skins leather, furskins, and saddler. The
agricultural exports of significance include cocoa beans and products, rubber,
fish/shrimp, cotton, processed skin, etc (Okoro and Ujah, 2009). These
agricultural products account for about 39.7% of the total non‐oil exports in 2007 (CBN, 2007). According to Soludo (2006), agriculture
has been growing at about 7% per annum in the last three years and has been
driving the non‐oil growth, and will continue to hold the key to
growth, employment and poverty reduction.
In
terms of value of import vis‐Ã ‐vis export, Nigeria is a huge net‐importer of agricultural products. The import‐export gap has been widening since 1999 and this puts the agricultural
policy of the nation to question. This situation, however, provides a unique
opportunity for closing up or eliminating this ‘agricultural deficit’ through
functional policies and budgets (Okoro and Ujah, 2009).
Agriculture
also is a significant sector in the Nigerian economy. Although Nigeria depends
heavily on the oil industry for her revenues, Nigeria is predominantly an
agrarian society with the sector contributing about 42%1 of real GDP in 2008
(CBN, 2008). In 2007, the contribution of agriculture to economy totaled some
$132.2 billion (Economist, Sept. 2008). Eboh, Ujah and Nzeh (2009) show that
the contemporary economic significance of the.....
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