AGRICULTURAL FINANCE DEVELOPMENT PROBLEMS AND PROSPECTS
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AGRICULTURAL FINANCE DEVELOPMENT PROBLEMS AND PROSPECTS
PROBLEMS AND OPPORTUNITIES IN AGRICULTURAL FINANCE DEVELOPMENT
Based on historical evidence, agriculture made the greatest contribution to the Nigerian economy. However,
agricultural production has been declining dramatically, particularly since the oil boom. Due to the difficulties the agriculturist confronted, this also contributed to the sector’s neglect.
Nigerian agriculture is distinguished by the wisdom of small-scale farming, which produces the majority of overall output. Small-scale farmers have formed the backbone of our agricultural sector, and they are characterised by illiteracy, small farm holdings, little capital, questionable ownership to land, low productivity, and limited savings.
The number of mixed class farmers is growing in absolute numbers, but it is significant in terms of rationing. He has more wealth, is more educated, and most likely had a successful profession before retiring to farming.
He has better access to capital and information, yet this class of farmers is still minor in terms of agricultural production contribution. It is both university and inaccurate to build agricultural strategy on it.
at Nigeria, the government, at its several stages, is another of Agriculture. She becomes active in physical farming as well as basic infrastructure and input provision.
Agriculture Development Project, National Accelerated Food Production Programme, Poverty Alleviation Programme, and so on are some examples. The abundance of this scheme is just one example of the uncertainty about the role of government in agriculture.
The government appears to have been inefficient and unsuccessful both in physical farming and in supporting agricultural finance, which appears to have boosted the number of Central Bank of Nigeria loans in this direction but has not had a matching influence on the economy.
One of the fundamental solutions is to rethink and direct agricultural policies and strategies towards small-scale farmers. To attain and fulfil the purpose of this study, the researcher used both primary and secondary data to the greatest extent possible.
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Agriculture is described as the cultivation of land for the production of food for humans, animal feed, and fibre or raw materials for our businesses. It encompasses crop processing and commercialization.”
In other words, it encompasses all activities associated with the primary and regulated production of plants and animals, such as fisheries, forestry, farming, cattle, poultry, and small scale industries associated with agricultural product processing.
Agriculture is Nigeria’s major industry, providing not just food and cash crops that are consumed locally and exported to gain foreign exchange, but also employing more than 75% of the total population, earning revenue for people and the government.
This contributes significantly to the ratio of our Gross National Product (GNP).
It is vital to emphasise that Nigeria’s current economic situation can be attributed to a significant decrease in agricultural sector contributions. The importance of the agricultural industry to the national economy before and after independence cannot be overstated.
Agricultural items dominated Nigeria’s export trade during and shortly after independence, but currently, these products (GNP). Agriculture contributed 61.5% of the total in the early years of independence (1963-1964). It fell by a dismal 2.3% in the 1970s. The drop can be linked to oil’s dominance of the nation’s exports since 1970.
In 1970, the oil industry accounted for 57:6% of total export income, and this share rapidly increased, reaching an overwhelming proportion of 98% in 1981.
This oil has resulted in a complete disregard for both GDP (Gross Domestic Product) and export revenues, which has been the primary cause dictating the necessity to reactivate agricultural products. Years have passed due to the necessity for reactivation and efforts to revitalise this sector.
It increased from 6% in the 1970s to 22% in 1984. This rise serves as an incentive and motivation for farmers, but these farmers are subject to a variety of concerns, including disease and pest attacks, fire destruction, industry pollution, mechanical breakdown, and other issues.
Farmers want assistance in resolving or minimising these issues.
One answer to these challenges appears to be a loan from the Central Bank of Nigeria. To deal more effectively with the risks to which farmers are exposed and to stimulate the growth of agriculture’s contribution to our economy, the Federal Government of Nigeria created and launched agriculture insurance in Nigeria on December 15, 1987.
The scheme had a budgetary allocation of N4.5m when it was introduced in Nigeria in the year, N6.5m was used to set initial expenses, and N35m was the initial contribution to the reserve fund.
Crops (maize and rice) and livestock (poultry and cattle) are the principal farming activities covered by this scheme. Fixed assets such as farm buildings, farmers, employees, and dependents.
Following the formal debut, the Federal Government of Nigeria (via the Central Bank of Nigeria, as their agent) founded the Nigeria Agriculture Insurance Company to improve and manage the administration of the plan,
as well as to insure loans made to farmers by the Central Bank of Nigeria. The system was created to help small, medium, and large-scale farmers, either collectively or individually.
To ensure the scheme’s success, the Federal Government of Nigeria, through the Central Bank of Nigeria, subsidised the premium rate to 59%, allowing subsistence farmers to join. This will undoubtedly increase food production and surplus for exportation.
However, despite the efforts of the Central Bank of Nigeria to make this scheme a success, it has not been implemented as effectively and efficiently as expected; thus, this is an indication that there have been some elements of problems impeding its positive functioning.
1.2 STATEMENT OF THE PROBLEM
It is self-evident that agriculture has been losing its key position in the Nigerian economy, despite the several policies aimed to revitalise it. The lack of modern farming storage facilities,
manufacturing, and distribution systems has been identified as a severe hindrance for the typical Nigerian farmer. The federal government of Nigeria has then mandated the central bank of Nigeria, the apex bank, to find a solution to these problems.
As a result, the Nigerian Central Bank, through its agencies, provides agricultural finance. However, the following issues arose:
– A general lack of awareness.
– Inadequate public education
– Poor management
– The lending institution’s lack of cooperation
The agriculture insurance firm was established to reduce the high rate of default.
– The public’s scepticism towards insurance
– Inadequate cash liquidity to pay the premium.
The problem is that, despite the efforts of the Central Bank of Nigeria, including the recent establishment of the Nigeria Agricultural Insurance Company, the impact of agriculture on the economy continues to decrease.
1.3 GOAL OF STUDY
The primary goal of this research is to assess and identify the performance of the Central Bank of Nigeria and its agencies, including the Nigeria Agricultural Insurance Company, as well as the performance of the Central Bank of Nigeria and agricultural financing.
This entails.
– To ascertain the precise efforts of the Central Bank of
Nigeria is a leader in agricultural funding.
– To identify Central Bank of Nigeria agencies in Nigeria.
related to Nigeria agriculture.
-To identify challenges related with these agencies’ implementation and to provide solutions to improve agricultural financing.
-To evaluate the pre- and post-Nigeria Agricultural Insurance Company, as well as the performance of the Nigerian Central Bank in agricultural financing.
– To ascertain why agriculture holds a crucial position in the
The economy is still far from having recovered in order to
recombining possible solutions.
These goals are critical because agriculture is the foundation of every healthy economy, particularly in Nigeria due to the country’s natural agricultural assets.
I feel that this is why many governments have always used agricultural slogans as the key to achieving their major goals. Examples of former government slogans are – operation feed the Nation Green Revolution.
1.4 RESEARCH QUESTIONS
(1) How has the formation of the Nigeria Agricultural Insurance Company (NAIC) aided in the increase of agricultural productivity in Enugu State?
(2) To what extent do farmers gain from (NAIC) in the event of a natural disaster that causes financial loss?
(3) How does the creation of NAIC in Enugu State improve the volume of agricultural loan lending to farmers by banking institutions?
(4) To what extent has the formation of NAIC aided in the equitable distribution of government financial relief packages to farmers who have suffered financial losses as a result of natural disasters?
1.5 RESEARCH THEORIES
The Central Bank of Nigeria’s role in agricultural financing development will be incomplete unless the following hypotheses are tested:
1. Ho: Since the inception of NAIC, there has been no significant association between the mean perception of NAIC employees in Enugu State office and farmers in Enugu on the improvement of agricultural productivity in Enugu State.
Hi: Since the foundation of NAIC, there has been a significant association between the mean perception of NAIC personnel in Enugu State office and farmers in Enugu on the development of agricultural productivity in Enugu State.
2. Ho: There is no substantial difference in the views of NAIC employees in Enugu State and farmers in Enugu State on the benefits farmers receive from NAIC in the case of natural disasters on their farm setup.
Hi: There is a major divergence in the views of NAIC employees in Enugu State and farmers in Enugu State on the benefits farmers receive from NAIC in the case of a natural disaster on their farm setup.
3. Ho: There is no substantial difference between the NAIC employees of Enugu State office and farmers in Enugu State office and farmers in Enugu State to increase the amount of agricultural loan lending to farmers by financial institutions.
Hi: There is no discernible difference between the NAIC personnel of the Enugu State office and farmers in Enugu State in terms of increasing the volume of agricultural loan lending to farmers by financial institutions.
Hi: There is a major disparity between the NAIC personnel of the Enugu State office and farmers in Enugu State to increase the level of agricultural loan lending to farmers by financial institutions.
4. Ho: There is no substantial difference between the NAIC personnel of the Enugu State office and farmers in Enugu State who assisted in the equitable distribution of financial assistance packages to farmers affected by natural disasters.
Hi: There is a considerable difference between the NAIC personnel of the Enugu State office and farmers in Enugu State, which has assisted in the fairly distribution of financial relief packages to farmers who have suffered from natural disasters.
1.6 THE IMPORTANCE OF THE STUDY
Unless the root cause of a problem is identified, any attempt to solve it is likely to be futile. However, once the root reasons of a problem situation are understood, solutions are simple to find.
Agriculture’s role to the nation’s economy in terms of basic raw materials for industries, food for the growing population, and trade and payment balance cannot be overstated.
Furthermore, it offers job opportunities and serves as a source of money for the government and private sector of the economy.
So, in this setting, because agriculture cannot be neglected, there is a need to do this descriptive research to discover the true nature of its challenges, particularly in the context of agricultural funding.
When completed, the research will be useful to the following;
– Agriculturists and farmers
– Insurance companies (including agricultural insurance firms)
– Students enrolled in the banking and insurance department.
– The Federal Government of Nigeria (Central Bank of Nigeria)
– Subsequent researchers in the topics
1.8 DEFINITIONS OF TERMS
DEVELOPMENT => This refers to a continuous process of growth.
Increased per capita and total income, accompanied with structural changes in the socioeconomic and political environment.
FINANCIAL INSTITUTION=>These are financial institutions.
Private or public institutions that transfer loanable funds from savers to borrowers.
AGRICULTURE=> The term “Agriculture” is used in this study article in its broadest sense, which covers crop production, research, and training, as well as forestory fisheries and livestock.
SMALL SCALE FARMERS=>this refers to the size of a farm holding; literacy and ignorance; a lack of capital, practical assistance, and clear title to land; the degree of productivity; low income; and the general rural environment.
FARMERS=> The term “farmer” has been used in a broad sense to encompass the entire range of agricultural production.
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