THE ROLE OF THE NIGERIAN AGRICULTURE AND CO-OPERATIVE BANK IN
AGRICULTURAL FINANCING
(PROBLEMS AND PROSPECTS)
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 cannot 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.
TABLE OF CONTENT
Title page ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vi
Table of content vii
CHAPTER ONE
Introduction 1
1.1 Statement
of problem 2
1.2 Rationale of study 2
1.3 Definition
of term 3
CHAPTER TWO
Review of related literature 5
2.1
the concept of agricultural
financing 5
2.2
Evolution of the NACB 6
2.3
Overview of the NACRDB 7
2.4
The need for Agricultural financing 9
2.5
Objective of NACRDB 11
2.6
Role of NACRDB 12
2.7
Lending Operations 14
2.8
Problems of Agricultural financing
in Nigeria 15
2.9
Measures to prevent the problems of
Agricultural
financing in Nigeria. 20
CHAPTER THREE
3.1
Statement of Hypothesis 21
3.2
Research methodology 22
3.3
Sources of Data 23
CHAPTER FOUR
DATA PRESENTATION AND
ANALYSIS 24
4.1
Data presentation 24
4.2
Data Analysis 31
CHAPTER FIVE
Summary,
Conclusion and Recommendation 39
5.1
Summary 39
5.2
Conclusion 41
5.3
Recommendation 42
Bibliography 43
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
1.3
DEFINITION
OF TERMS
AGRICULTERAL
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.
NECHANISED 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.