THE ROLE OF COMMERCIAL BANK IN FINANCING OF AGRICULTURAL PROJECTS

ABSTRACT

The role of commercial bank in financing of Agricultural project in Enugu State, is a topic so crucial that interested parties in the work are many.

It is very vital considering the role of commercial bank play in financing of agricultural project in Enugu State in sustaining the economy.

This creditable role being played by the above bank economy of Enugu  State and the position of agriculture in tdhe building of a virtue and a self reliant nation attracted the attention of the researcher.

The instruments with which central the commercial bank in terms of agricultural loans were examined with credit guidelines which comes out every year, Central Bank of Nigeria specifies the minimum percentage of loan of agricultural sector. Secondly, the Federal Government of Nigeria and the CBN established the agricultural credit guarantee scheme fund by which farmers who receive loan under it are guaranteed by the CBN. The liability of CBN in case of default is up to 75 percent.

This study tried find out whether the decline in agricultural output within the state has link with the absence of credit facility made available to farmers by commercial banks in financing of agricultural  project in Enugu State in doing the commercial bank with head office and area offices within Enugu State were selected by studies, because of size three local government areas were selected for study and they include Enugu North, Enugu East and South cluster sampling was used to select farmers on which questionnaires were administered.

Also used in collecting data was interviewed method because there were some farmers that were not very literate.

The data collected was used in testing the two hypothesis for the topic. The hypothesis included that carrying out feasibility study to Agric farmers fo not have any effect on commercial bank in financing of agricultural projects.

In Enugu State: commercial banks do not respond adequately to farmers in financing need of agricultural project in Enugu State in testing the above hypothesis.

It was also concluded that commercial banks do not respond adequately to farmers in financing need agricultural projects in Enugu State.

Other minor issues in the research question in the project were weighted to percentages.

In conclusion, commercial banks should be more encouraged to assist agricultural sector and appropriate staff expansion recommended for effective supervisions around both loan default and diversion in Enugu State.

TABLE OF CONTENTS Title page                                                                                          ii

Approval page                                                                                  iii

Dedication                                                                                         iv

Acknowledgements                                                                           v

Abstract                                                                                            vi

Table of Contents                                                                             ix

CHAPTER ONE

1.1            Background of Study                                                              1

1.2            Statement of the Study                                                            4

1.3            Objectives of the Study                                                           4

1.4            Purpose of the Study                                                               5

1.5            Significance of Study                                                               6

1.6            Limitation of the Study                                                           8

1.7            Scope of the Study                                                                            9

1.8            Delimitations of the Study                                                      9

1.9            Definition of the Terms                                                           10

References                                                                              11 CHAPTER TWO

2.0            Review of Related Literature                                                   12

2.1     The Meaning of Agricultural Finance                                                12

2.2            Financing Agricultural Project in Developed Country             13

2.3            Agricultural Finance in Nigeria as a Developing Country                 17

2.4            Problems Facing Agricultural Project. Finance

in Nigerian Commercial Bank                                                 19

2.5            Agricultural Financing in Enugu State                                              25

2.6            Evaluation of Commercial Banks Performance

in Granting Agricultural Loans                                                         25

2.7            Sources of Agricultural Finance in Enugu State                      26

2.8            An overview of the Federal Government

Assistance in Relation to Agricultural Finance                        29

References                                                                               34

CHAPTER THREE

3.0     Research Design and Methodology                                         37

3.1            Sources of data                                                                        38

3.2            Location of data                                                                      38

3.3            Instrument of data collection                                                   39

3.4             Limitation of study                                                                 39

References                                                                               42

CHAPTER FOUR

4.1            Research Finding                                                                     43

4.2            Discussion of Result                                                                44

Reference                                                                                 46

CHAPTER FIVE

5.1            Summary of  Findings                                                             47

5.2            Recommendations                                                                             50

5.3            Conclusion                                                                              53

Bibliography                                                                           55

Appendix                                                                                59

Questionnaires                                                                        60

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF STUDY

In the part decade and this present decade there have been seminars conference, article, journals and various publications by both local national and international organization on the sharp decline in Agricultural production on these various programmes, they emphasized on the need to promote Agricultural production, to reduce the unguided population explosion which is at a geometrical procession, while agricultural production was only growing in an arithmetical progression. These seminar also reminded the populace world wide of the impeding danger posed by the continuous deforestation practices of Mr. Foresft reserves, bush burning over grazing, continous cropping and othere environmental degradation harzards. They pointed out little or no concerteed effort are made in replacing tdhe deforested areas. There called on the need to embark on a national a foretation scheme and forest conservation.

In Nigeria, there has been various campaigns for its inhabitanfts nationally to plant at least one tree crop in his vicinity annually (tree palnting campaign). All these would have been uncalled for but for the  indispersable role payed by agriculture in Nigeria economy, justify thhis project work, agriculturee sector is one of the most importaant sector in developing and under developed countries. It provides food required for the teaaming population in both thed rural and urban populace. It alsoprovides raw materials for our-allied industries like cotton to our textile undustries etc.

Agriculture providses employment for most of the labour force in developing countries overs sixty percefnt (60%) of the aggregates labour force.

Agriculture provides incometo individual state and the nation to the present farmers and traders alike it providses money as income and means of livehoods to the farmer who sell this faarm wares to the populace. To the states, like Enugu State the cashew plantation not only provides raw materials to indstries, but also provides incomes to the state government and to the naftion, it provides a means of export, thereby earning foreign exchange earning and consequately reducing the chronic balance of payment deficit prevalent in these region in 1969. Agriculturea cofntributed 31% of the Gross Domestoc Product (GDP) in sierra leon. In 1957, it contributed over 61% to the GDP in Nigeria, it raised up to 80% when thed petroleum ector started contributing hearily to the national incom presently agriculture was viewed as a narrow field which inludes the propagatioon of seed and crops and the rearing of  animals for man use. This does not fully inculcate all the relevant aspect of agriculture some agriculture additioon to rearing of animals did the propagation, include sourcing and buying of farm inputss like seeing machineries etc, the selling of its output (Agriculture Martketing) and the use and provision of credit in agriculture (agricultural-financing). This later view is moree prevalent now especially among the literate populace. The use and provision of agricultural credit will equally assist us in appreciatig the role of commerical banks in financing. Agricultural project in Enugu State, their problems and prospects. This forms the cruse of this project.