Credit Financing and Agricultural Sector Performance in Nigeria (1989–2019)

Abstract

Providing people with a good standard of living through food consumption, businesses with employment opportunities, and the government with tax revenue through product exports, as well as creating an environment that is favorable for the economy to flourish, determines how well the agricultural sector is performing. Due to insufficient funding, excessive interest rates, and poor policy measures, the agricultural sector's performance continues to suffer. Therefore from 1989 to 2019, the study examined the impact of credit finance on agricultural performance in Nigeria. An ex-post facto research design was used in the study. The study made use of Time series data. The data were obtained from Central Bank of Nigeria (CBN) statistical bulletin. The study employed descriptive statistics, unit root test, co-integration, bound test, and Auto regressive Distributed lag models, and inferences were made at 5 percent significant level. The study showed that Deposit money banks credit to the Agricultural sector was positively related and significant to agricultural sector performance in Nigeria (β=0.759; P=0.004), while government expenditure on agriculture was positively related and significant to agricultural sector performance in Nigeria (β=0.598; P=0.0002) and interest rate posits a positive but insignificant effect on agricultural sector performance in Nigeria (β=0.1507, P=0.580) within the observed period. The study concluded that deposit money banks' credit to the agricultural sector and government expenditure on the agricultural sector has positively influenced agricultural sector performance, while interest rate on deposit money banks' credit does not have a significant effect on agricultural sector performance. It was recommended that Commercial banks should establish a panel examining committee to make sure that the money distributed is rigorously used for its intended purpose and is not diverted in any way. The delay and strict requirements in assessing deposit money banks' credit and facilities should be overhauled.