Impact of Agricultural Credit on Economic Growth in Nigeria

Mosinmileoluwa Afolabi,Grace Evbuomwan,Godswill Osagie Osuma,Ochei Ailemen Ikpefan

doi:10.37394/23207.2021.18.52

Mosinmileoluwa Afolabi, Grace Evbuomwan + Show 2 more

Open Access

https://doi.org/10.37394/23207.2021.18.52

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Abstract

This study’s aim was to examine the influence of agricultural credit on Nigeria's economic growth for the period of 1981-2017. Data is sourced from Central Bank of Nigeria (CBN) statistical bulletin and world development indicator (WDI). The detailed objectives are to analyze the effect of the Agricultural credit guarantee scheme fund (ACGSF) and the deposit money bank credit to agric sector (DMBCA) on Nigeria's Economic Growth. Data was analyzed using the test for stationarity, Auto-Regressive Distributed Lag (ARDL). ARDL is adopted due to the mixed order of stationarity of the variables at levels and first difference. From the research results, it was established, in the long run, that DMBCA is significant and there exists a direct relationship, only in the short run, and the ACGSF is insignificant both the short and long run but has a direct relation in the short run and an inverse relationship in the long-run. Therefore, it is recommended, that the Federal Government should make coordinated attempts to ensure that farmers especially small-scale farmers have easy access to the financial aids and grants provided and the funds should be disbursed appropriately and adequately without any hitch.

Highlights

Agriculture is the oldest and most significant occupation of man
The test results revealed that variables (SDMBCA, Agricultural credit guarantee scheme fund (ACGSF), INFL, OEXR) were stationary at first (1st) difference while Gross Domestic Product (GDP) and RINT were stationary at levels
Auto-Regressive Distributed Lag (ARDL) technique was applied to check for short & long run relationship amongst the variables due to mixed stationarity levels of order I (0) and I(1).[24] noted that the main advantage of ARDL is that ordinary least square (OLS) method provides accurate estimates of parameters over other estimation methods and it is a reliable parameter estimate if some variables are 1(0) & 1(1) which basically means that there is a longterm link amongst the variables

Summary

Introduction

Agriculture is the oldest and most significant occupation of man. It consists of; soil cultivation for planting crops & rearing animals to supply food, wool, and other products for personal or general consumption. [1] concluded that, before oil was discovered and a decade after independence, Nigeria was designated as an agrarian economy based on its position as the basis for economic growth, as it became the primary industry contributing approximately 70 percent of the Gross Domestic Product (GDP), 90 percent of foreign exchange and Federal government revenue and provided employment to 70% of the labor force. [1] concluded that, before oil was discovered and a decade after independence, Nigeria was designated as an agrarian economy based on its position as the basis for economic growth, as it became the primary industry contributing approximately 70 percent of the Gross Domestic Product (GDP), 90 percent of foreign exchange and Federal government revenue and provided employment to 70% of the labor force. She was the second (2nd) key cocoa producer in the world, the leading exporter and manufacturer of palm oil, groundnuts, cotton, hides, and rubber, according to [2] and the largest economic sector accounting for over 2/3 of Nigeria's earnings from export during the colonial era. Nigeria’s agrarian sector contribution to GDP is still below average at around 26.15 percent, which is still very low compared to its contribution to GDP in the 1960s as observed by [4]

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