Abstract
In most developing countries, agriculture is both the main sector that provides employment to large segments of the population and the key to sustained economic growth of the countries like Nigeria. This study presents an empirical analysis of the Impact of Agriculture on Bank Credit in Nigeria.. Also, highlighted are the problems of agricultural production in Nigeria and the strategies for agricultural transformation of the economy. Our findings revealed that agricultural variables have impact on food industries in Nigeria. Consequently, the macro-econometric model in this study contributes to the development of policy and programming by shedding light on the choice to be made and indicating the magnitude and direction of responses that can be expected from changes in key agricultural policy. It is a known fact that the efficiency of credit facility positively contributes to production base of a sector, especially the Nigerian agricultural sector which is recognised as the heartbeat of the economy by employing over 70% of the country’s labour force; this forms the motivation for this study. This study also deals with the potentials of agricultural output in terms of commercial bank loan to agriculture and agricultural credit scheme as well as their corresponding interest rates to farmers towards increasing agricultural production as the pathway to food industries in Nigeria. The study employed the Autoregressive Distribution Lag (ARDL) econometric approach on the time series data sourced from the Central Bank of Nigeria (CBN) statistical bulletin, Food and Agriculture Organisation (FAO) and the World Development Indicators (WDI) for the period 1998-2018. The result from ARDL showed that commercial banks loan and Agricultural Credit Scheme increased food industries and agricultural output by 8.12% and 0.002% respectively, while population reduces Agricultural Output by 0.001%. Keywords : Agriculture, Bank Credits, Nigeria DOI: 10.7176/JESD/12-12-13 Publication date: June 30 th 2021
Highlights
Nigeria is popularly known as the largest oil producing country in Africa
The Augmented Dickey-Fuller (ADF) unit root testing of the variables indicates that three of the variables which include AGO for the agricultural output, POP for the total population, and CBL (Commercial bank loans) attain their stationarity at the first difference which means that they are all integrated of order one while ACS (Agricultural credit scheme) and Lending rate (LR) attain stationarity at level which means it was integrated of order zero
We investigated the impact of agriculture on food industry in Nigeria
Summary
Nigeria is popularly known as the largest oil producing country in Africa. Agriculture remains the base of its economy. Various strategies have been envisaged by government and stakeholders at all levels; one of such strategies is hinged on the need to increase farmers access to agricultural finance (credit) to increase productivity, while others focus on agricultural diversity (Osabohien et al, 2018) These strategies are important because, in developing countries, especially in Africa, the agricultural sector accounts for more than 50% of the entire labour force and it contributes significantly to the Gross Domestic Product (GDP) (Osabohien et al, 2020; Matthew et al, 2019). According to Udih (2014), bank lending is expected to impact positively on the investible sectors of the economy, through improved agricultural production of goods and services He opined that sufficient financing of agricultural projects will promote food security, and enhance the entrepreneurship performance of our young investors. The Augmented Dickey-Fuller (ADF) test was used to investigate whether the variables used in this study have a unit root or not
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