Effects Of Agro-Allied Funding And Agricultural Productivity In Nigeria
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Effects Of Agro-Allied Funding And Agricultural Productivity In Nigeria
ABSTRACT
This study looked at the impact of agro-allied funding on agricultural productivity in Nigeria. Three research hypotheses were developed to guide and lead the investigation. They are: (1)There is a strong link between agricultural funding and agricultural productivity in Nigeria.
(2)There is no long-term link between agro-allied finance and agricultural productivity in Nigeria.
(3)There is no significant link between the agricultural credit guarantee plan fund and agricultural production in Nigeria. Data for the study were gathered from the Central Bank of Nigeria’s Statistical Bulletin. In order to address the research questions, the study used the ordinary least squares technique.
The study discovered that commercial banks’ credit and government spending on the agricultural sector had a favourable but small effect on agricultural productivity in Nigeria.
However, the analysis discovered a positive and significant correlation between the agricultural credit guarantee plan fund and agricultural output. The report proposed that the agricultural credit guarantee plan fund be adequately funded by the government in order to stimulate agricultural productivity.
Chapter One: Background of the Study
Agricultural productivity is a measure of the amount of agricultural output produced for a given number of inputs, expressed as an index of multiple outputs divided by an index of multiple inputs (for example, the value of all farm outputs divided by the value of all farm inputs).
Also Agro allied money is sometimes known as agricultural financing. According to Ugwuanyi (1999), agricultural financing is the process of raising funds and making them available for agricultural output and consumption. Agricultural financing simply refers to the acquisition and use of funds for agricultural purposes.
Agriculture plays a crucial role in any economy and is not debatable. It is the most dominating sector, and it provides a significant source of income for its residents (Ijaiya & Abdulaheem, 2000).
This is because, in addition to providing food for the economy’s growing population, it is also a source of raw materials that other sectors seek before beginning production.
Furthermore, animal rearing provides agro-allied products for industrial growth and development, employment opportunities, particularly for the rural population, a market for the industrial sector, and the necessary linkage between the traditional and modern sectors, ensuring food security and thus serving as a catalyst for overall economic growth
. In line with these, Abayomi remarked that boosting agricultural productivity is seen as the most important factor in attaining industrialisation.
Agriculture employs over 70% of the labour force (Abubi, 2000). Prior to the 1970s, Nigeria’s economy was based primarily on agriculture. During this time, the Nigerian economy was mostly agrarian, with agriculture, solid minerals, and other metals serving as its foundation.
Agricultural goods were the country’s largest export earner. Nigeria was a major exporter of rubber, cotton, groundnut, palm oil, cocoa, and palm kernel in the 1950s and 1960s, accounting for 3% and 4% of yearly food and agricultural crop output growth, respectively (Osuntogun, 1997). Agriculture was also the greatest economic activity, accounting for 50.2 percent of GDP in 1960.
The agricultural sector is ignored due to crude oil’s dominance as a significant export revenue source, and its contributions to GDP have declined dramatically. Several causes, other than the emergence of oil, have been suggested as responsible in the declining factors.
Finance was highlighted as a major barrier to agricultural productivity. As a result, numerous programmes, policies, and organisations have been formed with the goal of providing the sector with simple access to financing.
Commercial banks were at the lead in this regard. Agricultural credit has been acknowledged as a crucial element in the development of Nigeria’s agricultural sector over the years (CBN 2005).
The agricultural sector has been funded through both local and macro sources of finance. The micro source refers to the use of commercial bank financing as capital for agricultural activities
whereas the government provides agricultural funding through capital mobilisation and allocation through agencies such as rural banking development programmes, the Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB), and the Central Bank of Nigeria.
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