Agro-financing and food production in Nigeria

Abstract

This study examines how agro-financing impacts on food production in Nigeria supporting Goal 2 of the 2030 Sustainable Development Goals (SDGs) which aims to “end hunger, achieve food security, improve nutrition, and promote sustainable agriculture”. The study covers the period 1981–2018 using annual data sourced from the World Development Indicators (WDI) of the World Bank, Central Bank of Nigeria (CBN) Statistical Bulletin. The Johansen and the Canonical Cointegration approaches are employed and findings reveal that agro-financing is statistically significant in explaining the level of food production in Nigeria.The result implies that a 1% increase in farmers' access to agricultural finance is associated with an increase in food production by 0.002%–0.006% depending on the model specification. This result aligns with the ‘a priori’ expectations as it is expected that more agro-funding at low-interest rates motivates farmers to secure high-yield seedlings, machinery and other farm implements, organic inputs that positively impact on total agricultural yield, leading to more food production. Therefore, the study recommends that more funding be allocated to the agrarian sector with less stringent credit conditions, and more arable land be allotted for farming purposes amongst others.