THE ROLE OF CENTRAL BANK OF NIGERIA PLC IN AGRICULTURAL FINANCE DEVELOPMENT PROBLEMS AND PROSPECTS

THE ROLE OF CENTRAL BANK OF NIGERIA PLC IN AGRICULTURAL FINANCE DEVELOPMENT PROBLEMS AND PROSPECTS

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ABSTRACT

The Role of Central Bank of Nigeria in Agricultural Finance Development, Problems and Prospects

The topic provide for conceptual frame work of the role played by the CBN in the development of Agricultural sector of the Nigeria economy as its primary purpose. Its secondary purpose is to assess the policies and program of CBN to the development of Agricultural Finance.

Data was collected from both primary and secondary sources. In the primary source I interviewed some farmers, officials of CBN while in the secondary data it was from annual time series of different duration on the program and policies of the institution.

The research showed the role played by the CBN in financing Agriculture in Nigeria by making funds available to farmers especially at the rural areas and granting of credit scheme funds to the farmers

Also the problem of ultracy by the farmers has posed a problem and government should make sure that extension workers are sent into the rural areas to educate the farmers.

 

TABLE OF CONTENT.

CHAPTER ONE

Introduction                                                                                           1

  • Background of the study 1
  • State of problems 7
  • Objectives of the study 9
  • Significance of the study 10
  • Hypothesis 11
  • Scope and limitation of the study 11
  • Definition of terms. 12

CHAPTER TWO

Review of Related Literature                                                                  16

2.1 Historical overview of Agriculture financing in Nigeria                  17

2.2 The importance of Agriculture                                                         19

2.3 Problems of Agriculture financing in Nigeria                                  20

2.4 The establishment of Central bank in Nigeria                                  22

2.5 The Major development programs and policies of

C.B.N in relation to Agricultural financing                                  26

2.6 The C.B.N and its objectives and functions.                                    39

2.7 The organizational structure of C.B.N

and its Agricultural finance development.                                    44

CHAPTER THREE

Research Design and Methodology                                                       48

3.1 Research methodology                                                                    48

3.2 Research Design                                                                              48

3.3 Area of study                                                                                   48

3.4 Sources of data                                                                                          49

3.5 Method of investigation                                                                   50

3.6 Method of data analysis                                                                   51

CHAPTER FOUR

Data Presentation and Analysis                                                              52

4.1 Introduction                                                                                     52

4.2 Analysis of responses to questionnaires                                           52

4.3 Testing of Hypothesis                                                                      58

CHAPTER FIVE

Summary of Findings, Recommendation and Conclusion                     64

5.1 Summary of findings                                                                       64

5.2 Recommendation                                                                             66

5.3 Conclusions                                                                                     67

          Bibliography                                                                                68

CHAPTER ONE

 

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Agriculture is defined as “the cultivation of land for the purpose of producing food for man, feed for animal and fibre or raw material for industrial companies.  It also includes the processing marketing of crops.  In other words, it embraces all activities involved in the primary and controlled production of plant and animals, such as fishing, forestry, farming, livestock, poultry and small scale industries connected with processing of agricultural products.

The agricultural sector forms the background of Nigeria economy dispite concerted effort in industrisation.  Agriculture occupies the pride place as the source of livelihood for over 70 percent of the population.  It is recognized as a pre-requisite to economic development.  With large scale dependence on agriculture for food, raw-material for industries etc, one would expect production to increase, rather it is disheartening to note that this is not the case.  Agriculture has suffered some neglects due to lack of investment since the inception of oil boom in 1970.  in fact, Nigeria is experiencing a dcline in the space of agricultural production in general, this situation is causing a great concern to the government.  Throughout the 1960s, Agriculture contributed 61.5%.  in the 1970s, it declined miserably be 2.3%.  this decline may be attributed to the domination of the nations export by oil since 1970 which accounted for 57.6% of total export income and rose steadily, attaining an overwhelming proportion of 98% in 1981.  as a result there was an absolute neglect in agriculture to both God (Gross Domestic Product) and export earnings which has been the major factor dictating the need to reactivate our agricultural products.  The need for this re-activaty and in effort to revamp this sector has been the reason for raising budgetary allocation in recent years to it.  It rose from 6% in 1970s to 22% in 1984.  this increase acts as incentive and motivation to farmers, but these farmers while engaging in these agricultural ventures are exposed to a lot of problem like diseases and pest attacks, fire destructions, industrial pollution, machinery breakdown and other problems.  To these problems, the farmers need some aids in solving or minimizing them.

Finance has been one of the most significant problems in the expansion of agricultural production.  This was as a result of the neglect of the agricultural sector following the oil boom of 1970s, when the oil sector become a major aspect of the Nigerian’s foreign exchange earning.  This contributed to the inadequate funding of the agricultural sector unlike before the boom.  Also the establishment of industries in the urban areas during the 1990 – 1994 National Development plan to boast industrialization drew the rural populace with constitute the farming population to urban cities for search of white color jobs.  A stage has reached, that average Nigerians are now underfed.  In the words of or P.N.C. Okigbo in 1990 “The average Nigerian consumed on the average, some 20.23 calories per day and 56.46 grammes of protein per day compared to the food and agricultural organization (FAO)minimum of 21.91 calaries and  53.8 grammmes of protein.  This the average Nigerian was and still, is among the worst fed in the world.

As a result of these situations; the successive Nigerian Governments showed concern over the decling situation of Agricultural production through policies and programmes aimed at revamping the agricultural production in attempt to encourage increase food production “The federal Government in 1993 tried the National Accelerated food production in programme (NAFPP) during the General Yakulu Gowon’s regime; Under the leadership of couneral Obasanjo, the Operation feed the Nation programme “(OFN) in 1976; Green Revolution came up under President Shehu Shagari and Rirectorate of food Road and Rural infrastructure under the regime of General Basangida regime.

 

Neither of these measures halted the Agricultural decline or any lasting effect on food production.  This is because “little or no meaningful attempt has been made to change the under developed status of the rural dwellers notwithstanding that these people constitute about 95 percent of the total population engaged in Agricultural in Nigeria.

It has been attributed that inadequate funding of agricultural project and programme has contributed in large measures to the government low production of Agriculture in Nigeria, and the government and other financial institutions forms the major sources of finance for Agriculture though policies and programmes.

Then what role and impact has the central Bank of Nigeria (CBN) as the bank at the apex of Nigeria Banking system, (Bank of last resort, bank to the government and Banker to other banks)” played to reinforce the government policies or revamp the agricultural sector of the economy.  The under – developed characteristic of the Nigerian economy has made the central Bank of Nigeria to be activity involved in the promotion of rapid economic development of other sector especially agriculture through its development roles unlike in developed economics where the role of central Bank is restricted to development of the financial system.

According to Dr Belshaw in his book entitled “Agricultural credit in economically under-developed countries he wrote that “in respect of agricultural credit, a central Bank has an important part to play by helping to establish, strengthen and promote the extension of commercial banking facilities and agricultural credit institutions.

Professor G. Nwankwo also wrote “it for instance mistaken to think and believe that only the functi

 

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