Role Of The Nigerian Agriculture And Co-Operative Bank In Agricultural Financing
Role Of The Nigerian Agriculture And Co-Operative Bank In Agricultural Financing
Abstract
The major function of the Nigerian Agricultural, co-operative, Rural and Development Bank is provision of loans and advances to individual and corporate farmers.
However, there are series of reasons for the need for special funding towards agricultural sector. The agricultural sub-sector is saddled with peculiar risks, risks that can hardly be diversified; illiteracy and ignorance; culture; interest rate, etc
Loan defaults occur when the borrowers can not meet up the repayment of principal and interest within the maturity time stipulated by the bank. Loan defaults have continued to increase tremendously, and it forms the major discouraging factor to the NACRDB in loan or credit extension.
Furthermore, tin the course of financing agriculture the NACRDB is faced with series of problems. Such problems i9clude unsystematic risk, time lag, poor infrastructural facilities, loan diversion, slow rate of return, collateral, government policies, political instability etc.
In other to identify these problems and the measures to solve such problems, the researcher made use of the secondary sources of data as well as partly, the primary source of data.
Chapter One
Introduction
1.1 Statement of the Problem
The role of the Nigeria Agricultural and co-operative Bank can not overemphasized. According to ugwuanyi (2002), there have been series of efforts. By the NACB in providing short, medium and long term finance to the Agricultural sector of the economy. This is aimed at making farmers to increase their problem, as well as adopting the mechanized system of farming. Anyanwu (1993) stated that it is also meant to encourage or create employment opportunity for the unemployed in the nation.
However, inspite of all the effort being made, the objective of increase in productivity can not actually be said to have been attained. Many people feel reluctant to go into agriculture, instead they seek for other job opportunities. On the side of the NACB, it feels reluctant in extending credit to some categories of farmers.
What actually are the reason for these set back? Could it be as a result of the rate of interest on loan amount? Could it be as a result of loan default? Could it be as a result of the amount being requested for? Could it be as a result of the nature of collateral involved?
Therefore, the researcher intends to investigate on the reason for all these set backs.
1.2 Rationale of Study
In respect to the rationale of study, the researcher intends to justify her reason for laying emphasis on this particular topic.
However, what motivated the researcher to write on this topic is as a result of the prevailing problems facing the NACB in Agricultural financing in the society.
Therefore, this study or research work will contribute immensely to improve the in dept knowledge of those in Agricultural sector as well as the NACB in respect to the role of NACB in Agricultural financing.
1.3 Significant of the Study
The usefulness of this research work can not be absolutely exhausted. However, individuals and groups of individuals will benefit from this research work, mostly those who are ignorant of the essence of the establishment of the NACB.
Also, those in Agricultural sector will also benefit from this research work. This is by having indept knowledge on how the NACB operate in terms of extending short, medium and long – term credits to farmers.
Conclusively, those in various schools of agriculture and other institute of higher leaning will benefit immensely from this work
1.4 Definition of Terms
Agricultural Financing:
According to Uguwanyi (1999), Agricultural financing is the sourcing of fund and making it available for agricultural production and uses. That is, it involves the acquisition and utilization of funds for agricultural purpose.
NACB:
Nigeria Agricultural and co=operative Bank, which was established to fill the financial gap in terms of credit extension to the co=operatives and the agricultural sector.
NACRDB:
Nigerian Agricultural, co-operative and Rural Development Bank, which was formed as a result of the merging of the inability of the NACB to meet up with its responsibilities.
Merchandised System Of Farming:
This implies the system of farming with the aid of machines, such as tractors, bulldozer or Catapilers, Ploughs, etc.
Collateral:
This is also referred to as security. It can be described as an item which a borrower deposits to a bank in hence of the loan amount, of which the bank will later consider in the case of default by the borrower.
Chapter Five
Summary, Conclusion and Recommendation
5.1 Summary
In respect to chapter one of this research work, what the researcher intends to investigate, the study where elaborated in details. However, there have been series of efforts by the NACRDB in providing short, medium and long term finance to the Agricultural sector in regards to agricultural financing; but the activity or practice of agriculture is said to be in a decline state. This is the reason why the researcher decided to embank on this research work so as to find out the reason for these set banks.
Furthermore, the researcher justified her reason for laying emphasis on this particular topic. What motivated the researcher to write on this particular topic is as a result of the prevailing problems facing the NACRB in Agricultural financing in the society.
In addition, the usefulness of this research work was highlighted. Individuals, groups of individuals as well as those in the Agricultural sector will benefit immensely from this research work.
In respect to the chapter two of this research work, the concept of agricultural financing, the need for agricultural financing, problems of agricultural financing were explained. Agricultural financing entails the sourcing of fund and making it available for agricultural production and uses. The financing of agriculture is very important because of the significance of agriculture to the Nigeria society.
However, in the course of this research work, the researcher was able to find out the needs for agricultural financing as well as the roles of NACRDB in a agricultural financing which include: making of loan and advances available to individual farmers as well as co-operative organizations, guarantee for agricultural and agro-allied ventures, etc.
The NACRDB face a lot of difficulties or problems in the course of discharging their duties in regards to agricultural financing. These are categories into three; problems associated with agriculture itself, problems created by farmers and other problems. Also, the various lending operations of the NACRDB were also identified. These include the small Holder loan scheme, the on-lending scheme and the investment loan scheme.
The content of the chapter three of this research work associated with the statement of hypothesis, research methodology as well as sources of data. The statements formulated with the view to accept or reject collected, analysed and interpreted data. Data collection was extensively on the secondary source and partly on the primary source.
Conclusively, the chapter four of this research work comprises of data presentation and analysis. Therefore, table, Bar chart, histogram and pie chart were used for the data presentation. Also, the collected data were analysed with the help of chi-square and correlation and regression analysis.
5.2 Conclusion
Financing of agriculture through credit extension on either short, medium or long term requires absolute carefulness. However, considering the serious implications of bad loans for the financial condition of the banks in our country today, bankers must not overlook measures to prevent loan defaults.
Bankers most be up-to-date on issues concerning credit extension. Bank official must not be allowed to be carried away by some personal ethics.
However, the role of NACRDB can not be overemphasised. It contributes immensely to the growth and development of the economy through agricultural financing.
5.3 Recommendations
In view of the summary of findings as well as the research work in general, I hereby recommend that banks should always put into consideration the possible measures enumerated in this research work. Also, the banks should try to assess various farmers in order to know the nature of credit they merited so as to avoid loan default.
Other area of my topic which future scholars can study are associated with: the importance of agriculture to the growth and development of the economy, the financing of agriculture by other Banks if possible, the financing of agriculture by non-banking institution and the individuals in a society, how government finance and source fund from agriculture, etc.
Conclusively, banks should also create enabling environment or avenue for effective communication to mostly those in the rural areas.
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