Agriculture Financing for Output Growth: A Focus on Livestock Production in Nigeria

Abstract

In this study, the effect of agriculture financing such as the agricultural credit guarantee scheme fund, bank loans and advances to agriculture, and foreign aid to agriculture on livestock production was examined in Nigeria from 1981 to 2021. Annual time series data for each of the variables were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the Organisation for Economic Cooperation and Development (OECD) Statistics. The method of data analysis includes descriptive statistics, a parsimonious error correction model (ECM), and diagnostic tests. Evidence of the first difference stationary processes was established from the unit root test results. This indicates that the variables are all integrated of order one, I(1). The Johansen cointegration test results show that the variables in the model have a long-run relationship. The parsimonious ECM shows that the agriculture credit guarantee scheme fund has a positive and significant effect on livestock output. The estimated parameters show that a 1% increase in the current value of the agriculture credit guarantee scheme fund leads to a 0.0244% increase in livestock output. Similarly, it was found that livestock output increased by 0.0183% following a 1% increase in the first-lag agriculture credit guarantee scheme fund. The findings highlight the importance of agriculture financing in boosting the growth of livestock production in Nigeria. The results further show that bank loans and advances, as well as foreign aid to agriculture, negatively and significantly affected livestock production. The error correction coefficient (-0.297) is negative and significant at the 5% level.