This study aims to examine analysis of agricultural financing in Nigeria (A study of Umuchinmere Procredit and First Bank PLC, Enugu). It is believed that generalization will be made on the entire nation based on the results arrived at in the research. The project is divided into five (5) chapter to enhance understanding and convenience. In chapter one, an introduction of the study was made. The statement of the problems were enumerated which includes lack of credit facilities. Decline of Agricultural production and subsequent food shortage in the country. The chapter also includes objective of the study. Significance of the study, scope and limitations of the study and definition of terms. Chapter two concentrated on the review of related literature. In chapter three the research design and methodology was discussed, sources of data e.g primary sources (interviews) secondary sources (text book, papers presented at seminar etc). Also discussed were the population and area of study, sampling of selected financial institutions. the main objective of the bank and their contributions in ensuring the development of Agriculture. Chapter four presented and analyzed the data collected. The project was finally concluded in chapter five after which summary of the findings was made which included that the banks and other financial institutions should render supportive service to farmers and cooperative societies and encourages rural development. Financial institutions should ensure that service and interest charges are moderate to enable famers repay loans. That government should ensure that funds allocated for agricultural productions are directed to a development bank and financial institutions for easy disbursement.
TABLE OF CONTENTS
Title Page i
Approval Page ii
- Introduction 1
1.1 Background of the study 1
1.2 Statement of the Study 3
1.3 Objective of the Study 5
1.4 Research Questions 5
1.5 Hypothesis Statement 6
1.6 Significance of the study 7
1.7 Scope of the Study 8
1.8 Limitations of the study 8
- Review or Related Literature 10
2.1 The Concept of Agricultural Development 10
2.2 Problems of Agricultural Development in Nigeria 12
2.3 The Concept of Agricultural Financing 15
2.4 Agriculture Insurance 21
2.5 Main Objectives of Selected Micro Finance 23
2.6 Importance of Credit to Farmers in Nigeria 26
2.7 Sources of Agricultural Financing in Nigeria 28
2.8 First Bank Agricultural Financing 35
- Research Design and Methodology 41
3.1 Research Design 41
3.2 Area of the Study 41
3.3 Population of the study 42
3.4 Sample and Sampling Procedure 42
3.5 Method of Data Collection 43
3.6 Sources of Data 44
3.7 Reliability of the Instrument 45
3.8 Validity of the Study 45
- Data Presentation and Analysis 46
4.1 Introduction 46
4.2 Test of Hypothesis 60
- Summary of Findings, Recommendation and Conclusion
5.1 Summary of Findings 69
5.2 Conclusion 71
5.3 Recommendations 72
1.1 BACKGROUND OF THE STUDY
Agricultural development remains very vital to the growth and development of every economy. The sector’s roles include improving food security, resource employment and poverty alleviation. Currently, agriculture accounts for the single largest portion (about 40%) of national economic output (GDP) in Nigeria (Attah; 2008). But so far, both private and public sectors investment in terms of loans and credit to agricultural development have been meager and disappointing. The private investment in agriculture in terms of banks’ credits is the least among all economic sectors. Banks are generally reluctant to finance agriculture.
For instance, from 2006-2008, the average total annual flow of bank credits to agriculture was only 2.27% of their total credit (Eboh, 2011).
In public sector investment to agriculture, within 2002-2007, federal government spends 4.3% while state governments spend on the averaged 3.4%. Moreover the long term average ratio of agriculture to GDP is about 0.07, indicating less than one tenth of the sector’s share of the GDP. This collaborates with the observation by Sackey (2011) that public policy towards agriculture in Nigeria prior to 1974 has been taxing agriculture to finance other sectors.
(Journal of Research in Pure and Applied Sciences Vol 1 No 1 June 2013 37)
The huge financing gap in agricultural sector also manifests itself in Federal government budgets. The projected federal government funding for agriculture and food security over a four year period (2008-2011) is about N935 billion. But, total federal budget for agriculture and water resources in 2008 was less than N120 billion, as against the projected funding needs of about N319 billion for 2008. This meager flow of credits does not correspond with agriculture’s status in the national economy.
1.2 STATEMENT OF THE PROBLEMS
Agriculture has been dominating sector of Nigeria economy in the 70’s. Later, adequate attention was not given to thus sector of the economy. This led to the decline of Agricultural production and subsequent food shortage in the country. It has been realized that one of the major constraints to increase agricultural production is made quite difficult especially to the peasant farmers who produce the bulk of the food the nation feed on. In Nigeria, it is essential that two thirds of the Working population occupy small size farm units and also engage in subsistence agriculture.
Lack of credit facilities is generally seen as a major constraint in this effort to expand food production and modernize agriculture in order to feed the teeming population.
The government of Nigeria is recognizing this fact has made various attempts to provide credit and other facilities to the agricultural section over the years. Inspite of there attempts, agricultural production has continued to be on the decline relative to other sectors in its contributions to the Gross Domestic Product (GDP).
This study tends to find out how the huge decline in agricultural production can be arrested and through selected financial institutions.
- OBJECTIVES OF THE STUDY
- To determine the role agricultural financing in Nigeria
- The main objective of the study is to outline the roles financial institutions play in the development of agriculture in Nigeria.
- To appraise the contribution of Umuchinemerem Procredit and First Bank to the profitability of agricultural development.
- To make recommendation on how financial institutions can increase its support in agriculture.
1.4 RESEARCH QUESTIONS
- How can we determine the role financial institution in agricultural financing?
- What are the main objective financial institutions in the development of Agriculture in Nigeria?
- What are the s of Umuchinemerem Procredit and First Bank to the profitability of agricultural development?
- How can financial institutions can increase its support in agriculture?
1.5 HYPOTHESIS STATEMENT
H1: Financial institutions play a significant role in the agricultural financial in Nigeria?
H0: Financial institutions does not play a significance role in the agricultural financial in Nigeria?
H1: Inadequate funding is not the major factor that militating against the efficient performance of the Agriculture.
H0: Inadequate funding is the only major factor that militates against the efficient performance of Agriculture.
- SIGNIFICANCE OF THE STUDY
This study will be of value to financial institutions particularly the selected financial institutions. This is because the financial institution will be able to know and ascertain the financial needs of farmers agriculture cooperative financial institutions. The period of loan recovery and default on loans while selected financial institution will be in a positive to estimate the amount of credit for each periods, its adequacy or otherwise with view for looking for other sources funds. It will also guide them on how to tackle the various agricultural credit financing problems facing them.
To the economy at large, this research study will be of help, since agricultural production has in the recent past declined. It will help the federal and state government in formulating future agricultural credit policies for the country, hast but not the least, this work will be useful addition to the existing research work will be a useful addition to the existing research work carried out in the area of agriculture financing in Nigeria.
- SCOPE OF THE STUDY
This research work covers a comparative analysis of agricultural financing in Nigeria. This research tends to cover two financial institution; which are the First Bank of Nigeria Enugu and Umucheremerm Micro Finance Bank.
- LIMITATIONS OF THE STUDY
In the course of accomplishing this study, the researcher was faced with the following problems:
- Difficulties in Collection of Data: The researcher had limited access to official records and statistical data relevant to this work.
- Finance: There was no fund to facilitate on the issue of traveling around for further research to the selected financial institutions banks. Besides, there was high cost of transportation. This resulted to a barrier in research movement.
Time: The researcher found it difficult to combine the research work with academic work such as assignments, exams, etc due to their constraints.
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