THE ROLE OF CENTRAL BANK OF NIGERIA (C.B.N) IN AGRICULTURAL FINANCE DEVELOPMENT, PROBLEMS AND PROSPECTS

ABSTRACT

Based on historical evidence, the highest contribution to the Nigeria Economy was Agriculture at present, Agricultural Production has been deducing drastically, especially since the oil boom. This was also contributed to the neglect on this sector due to the problem the Agriculturist encountered.

Nigeria Agriculture is characterized by the pre-prudence of small scale farming which yields the bulk of the total production. The small scale farmers have been the bedrock of our Agriculture economy and is characterized by illiteracy, small size of farm holding, little capital, unclear titled to land, low productivity and little savings. The muddle class farmers has been increasing in absolute number but is significant in terms of ration. He has large capital, he is more educated and has probably succeeded in his career before retiring into farming. He has better access to credit and information and because  this class of farmers were still insignificant in terms of contribution to Agricultural production. It is university and misleading to base Agriculture policy formation on it.

The government in its various tiers is another of Agriculture, in Nigeria. She gets involved into physical farming as well as provision of basic infrastructure and inputs. Examples are: Agriculture Development Project, National Accelerated  Food Production Programme, Poverty Alleviation Programme, etc. The plethora of this programme is but  a pointer to the confusion regarding the role of government in Agriculture.

Apparently, government has been inefficient and ineffective both in physical farming and in a way of encouraging agricultural finance appears to have increased the volume of Central Bank of Nigeria loans in this direction but it has not had a corresponding impact on the economy. A need to reappraise and indirect agricultural policies and strategy towards the small scale farmer is suggested as one of the basic solution. To achieve and fulfill the motive of this study, the researcher tried as much as she could to use both primary and secondary data.

TABLE OF CONTENT

Title Page                                                                                ii

Approval Page                                                                        iii

Dedication                                                                               iv

Acknowledgement                                                                   v

Abstract                                                                                  vii

Table of content                                                                      ix

CHAPTER ONE:

1.1            Background of the study                                                         1

1.2            Statement of problem                                                    4

1.3            Objective of the Study                                                   6

1.4            Research Questions                                                       7

1.5            Research Hypothesis                                                     8

1.6            Significance of the Study                                               10

1.7            Scope, Limitation and Delimitations                                       11

1.8            Definition of Terms                                                       13

Reference                                                                       15

CHAPTER TWO:                          

2.0            Review Of Related Literature                                                  16

2.1             Nigerian Agricultural Insurance Company’s

Relationship with any other Establishment                             17

2.2            Accelerating with cheaper food production                                      18

2.3            Reasons for low agriculture output                                         20

2.4            Banking industry and development of agriculture                            22

2.5            Role of agricultural credit                                                        24

2.6            Reasons for low participations by

farmers in Nigerian agriculture                                                         26

2.7            Role of agricultural insurance company                                  28

2.8            Insurance and Agriculture                                                       29

2.9            Summary of the Reviewed Literature                                                32

Reference                                                                                 34

CHAPTER THREE

3.0     Research design and methodology                                          35

3.1     Research design                                                                       35

3.2     Area of study                                                                          35

3.3     Population                                                                               36

3.4     Sample and Sampling Techniques                                           36

3.5     Instrument of Data Collection                                                 38

3.6     Methods of Data presentation                                                          39

3.7     Methods of Data Analysis                                                       39

Reference                                                                                 41

CHAPTER FOUR

4.0            Presentation and Analysis of data                                           42

4.1     Data presentation                                                                             42

4.2     Testing the Hypothesis                                                            49

Reference                                                                                 60

CHAPTER FIVE

5.0            Findings, Recommendation and Conclusions                                   61

5.1     Findings                                                                                  61

5.2     Recommendations                                                                             62

5.3     Conclusions                                                                                      64

Bibliography                                                                           67

CHAPTER ONE

1.1                                    BACKGROUND OF THE STUDY

Agriculture is defined as the cultivation of land for the purpose of producing food for man, feed for animal and fiber or raw material for our industries. It is includes the processing and marketing of crops”. In order words, it embraces all activities  involved in the primary and controlled production of plant and animals, such as fishing, forestry, farming, livestock, poultry and small scale industries connected with processing of agricultural products.

Agriculture is one of Nigeria’s largest industry and it does only provide the food and cash crops which are consumed locally and exported to earn foreign exchange, but also employs more than 75% of the entire population, thereby generating revenue to individuals and government.

This goes a long way to increase the ratio of our Gross National Product (GNP).

It is important to note that the present economic predicament of Nigeria could be credited to the drastic fall in the contributions of the agricultural sector. The contribution of agricultural sector to the national economy before independence and the years period after, cannot be emphasized. During this period of per-independence and shortly after words, agricultural products dominated in Nigeria export trade, but today, these products (GNP). Agriculture contribution in the early years of independence (1963 – 1964) was 61.5% throughout the 60s. In the 1970s, it declined miserably by  2.3%. The decline may be attributed to the domination of the nations exports by oil since 1970 and  the oil sector accounted for 57:6% of total export income in 1970 and this share rose steadily, attaining an overwhelming proportion of 98% in 1981.

This oil lead to absolute neglect in the both GDP (Gross Domestic Product) and export earnings which has been the major factor dictating the need to reactivate out agricultural products. The need for the re-activation and in effort to revamp this sector has been the reason years to it. It rose from 6% in 1970s to 22% in 1984. This increase acts as incentive and motivation to farmers, but these farmers while engaging in these agricultural ventures are exposed to a lot of problems like disease and pest attacks, fire destructions, industries pollution, machinery breakdown and other problems.

To these problems, the farmers need some aids in solving or minimizing them.

Loan, through the Central Bank of Nigeria seems to be one of the solutions to these problems. To deal more effectively with these risks that the farmers are exposed and to encourage the growth of Agriculture Contribution towards our economy; agriculture insurance was introduced and launched in Nigeria on 15thDecember 1987, by the Federal Government of Nigeria. The scheme at it’s launched in Nigeria in the year has a budgetary allocation of N4.5m, N6.5m was used to set initial expenses and N35m, the initial contribution to the reserve fund. The main farming activities being covered under this scheme are crops (maize and rice) livestock (poultry and cattle). Tangible fixed assets like farm buildings and farmers, employees and dependants.

Following the formal launching, the Nigeria Agriculture insurance Company was established by the Federal Government of Nigeria (Central Bank of Nigeria i.e their agent) to enhance and oversee the operation of the scheme and to underwrite the loans given to farmers by the Central Bank.