Credit Financing and Agricultural Growth in Nigeria

Abstract

Agriculture is key to the industrial development of any nation this is because in addition to providing food security for the population, it also provide raw materials which industries depends upon for the production of goods and services. This study investigated the impact of credit financing on agricultural growth in Nigeria from 1989 to 2018.

This study adopted an ex-post facto research design, the data empirically analysed was a time series data sourced from CBN statistical bulletin. Agricultural gross domestic product to proxy agricultural growth, Deposit Money Banks' Credit to Agriculture, Agricultural Credit Guarantee Scheme and Government Expenditure on Agriculture to proxy credit financing. The study employed descriptive statistic, unit root test, co-integration, Bound Test and Auto

Regressive Distributed Lag Model methods of analysis as the analytical tools and inferences were made at 5 percent significant level. The study shows that deposit money banks loans to the agricultural sector (β = 0.783423,

t=5.371 p= 0.0000) impacted positively a significant effect on agricultural growth in Nigeria within the time frame. The study concluded that Deposit money banks' loans to agriculture has significantly impacted on agricultural growth in Nigeria. The study also ascertained that government expenditure on agriculture (β = 0.093623, t= 1.132349, p= 0.2716) impacted positively but insignificant on agricultural growth in Nigeria. The study concluded that

Government expenditure on agriculture has no significant impact on agricultural growth in Nigeria. The model also showed that Agricultural Credit Guarantee Scheme (β = -0.11088, t-- 0.813 p- 0.426) posits an inverse effect on Agricultural growth in Nigeria, however insignificant to determine agricultural growth in Nigeria. The study concluded that Agricultural credit guarantee scheme has no significant effect on agricultural growth in Nigeria The study concluded that the role of deposit money banks credit is more important as it is a source of providing different agricultural inputs which has strong impact on productivity. The government should provide subsidized credit to the farmers as this could positively influence more productivity in agricultural sector. To make the Agricultural credit guarantee scheme more productive special instructions and supervision should be carried out by loan issuing authorities.