THE ROLE OF BANKS CREDIT FACILITY IN FINANCING AGRICULTURE IN NIGERIA. (A CASE STUDY OF NIGERIA AGRICULTURAL COOPERATIVE AND RURAL DEVELOPMENT BANK (NACRDB), LOKOJA)
ABSTRACTThe primary objective of this project is to examine the role of bank’s credit facilities in financial agricultural sector with particular references to Nigeria Agricultural Cooperatives and Rural Development banks as a case study. The research work is entirely made up of five chapters. In chapter one, we painstakingly examined a number of issues such as statement of problem, aims objectives of study, significant of the study etc. chapter two, exhaustively dealt on literature review with in-depth analysis of all the views of the experts. Chapter three is centered on the research methodology of the study. Chapter four gives statistical and empirical account of the work based objectively and purely on the result of the questionnaire administered. Chapter five conclude the work with summary and recommendation based on the empirical findings, and references are also included. CHAPTER ONEINTRODUCTIONBACKGROUND OF THE STUDYThis research project is purposely carried out to examine the role of a financial institution in aiding, the agricultural sectors, through granting of credit facilitates, using Nigeria Agricultural Cooperative and Rural Development (NACRDB) as a case study.In the year back, the Agricultural sector has been faced many difficulties to meet up with their target due to inadequate financial assistance or credit facility from the government.Many researchers have been able to disclose that agriculture provides over 80% of employment and that over 80% of the farming population in Nigeria resides in rural areas.Hence, to develop agricultural production some important facilities have been put in place to encourage farmers. And this brings about agricultural credit facilities.Farmers before the introduction of the Nigeria Agricultural Cooperative and Rural Development Bank, seek credit from other sources such as commercial banks and private lenders which is really difficult if not unattainable due to the stringent condition imposed on intended borrowers by lenders.The introduction of Nigeria Agricultural Cooperative and Rural Development Bank as a specialized agricultural bank has really relieved farmers of the difficulties imposed by the money lenders.Agricultural is as olds the origin of Nigeria and the development in the area of agriculture has been a form of continuous variation.The development of agriculture can be grouped into three stages:Pre-colonial stageColonial stagePostcolonial stage1. Pre-colonial Stage: It can be viewed into perspective which is stone and medieval age.i. Stone Age: In this era, human race were concerned with food and shelter, the method of farming then was so poor that crops were destroyed by most of the dangerous insects such as locusts, pest and diseases, etc.ii. Medieval Age: This state emanates immediately after the age of stone, which was really a way of improving various stages of the stone age.The importance of agriculture was realized by a human being. Life was somehow primitive those men used animal skin for cloth others, cutlasses and hoes were made.2. Colonial Stage: By colonial stage, we refer to the period that Nigeria was actually colonies by British people and the coming of the country of British people about some development in the agricultural sector.3. Post Colonial Stage: This was the time that Nigeria became a nation of its own and no longer under the control and directive of the British people.Agriculture was recognized as one of the main sources of Nigeria's income, in the sense that, it provides raw materials for industries and foreign exchange for the country’s import needs. Thus, the effort production of that the active farming population (smallholder and families) constitute a central piece of the agric delivery credit programs designed and implemented by NACRDB over the past decades. 1.2 STATEMENT OF PROBLEMWith all the distance of NACARDB to farmers, numerous problems are still persisting, which are either caused by the farmers or the bank. On the farmer's side, some of the farmers hardly approach banks for loans, some do not have accounts with them at any time needed. On the other hand, the bank refuses to grant loans to peasant farmers at the right time. Among the problems are listed below:Inadequate Funding: The banks are finding it difficult to source their fund to meet the needs of the farmers.Hardship in Recovery of Loan: The loans granted to farmers are paid in half or not even paid at all. Thus, discouraging the banks from granting loans to farmers.Poor Interest Rate: NACRDB interest rate of 21% is the approved rate before recent time. The difficulty is not on the side of serving the overhead cost (as general administrative).OBJECTIVES OF THE STUDYThe primary objective of this research work is to examine the role of bank credit facilities on agricultural financing in Nigeria. RESEARCH METHODOLOGYResearch methodology refers to the different approaches or methods used by the researchers in the collection of data. This method was equally carried out in the collection of data in respect of bank credit facilities in financing agriculture using NACRDB as a case study.SCOPE OF THE STUDYThe scope of the work covers the NACRDB operation evolution and roles towards the development up to this year 2004. Despite the fact that there are other sources of finance for agriculture, this bank plays a vital role in agriculture credit facilities which boost maximum productivity among the other sources, loans from the NACRDB have been found to be easily attainable and less stringent than the sources.Therefore, the study covers the workings of NACRDB with regard to operation and organization.It is very important to note that the research work does not seem to have covered all areas concerning NACRDB but efforts have been made to cover as much as possible, the area of concerning studies with regard to NACRDB funding or agriculture.SIGNIFICANCE OF THE STUDYThe importance of the studies are:It serves as a source of information to other future researchers.To stimulate the interest of the farmer and the roles of NACRDB equally. it is a means of updating the knowledge of individuals farmers who are benefiting from the activities of NACRDB.To bring to the notice of the government and other finances of the bank on the need to improve on their present financing of the bank.LIMITATION OF STUDYThis research work supposed to have contained more information than what we have gathered but due to the following:The reluctance of must of the organization in providing the required information.Inadequate time to enable us to conduct in-depth research into the subject matter of this study has hindered the production of this research work. The financial constraints particularly at the initial stage of this project would have halted the successful completion of the study.Nonavailability of sufficient literature review.Despite the above problem mentioned, the researchers made use of his best luck by patronizing most of the bank, thereby dissenting most of the recommended factor mostly from NACRDB, for example on a member of the KABBA Branch rendered his maximum cooperation in this regard, regardless of the fact that they are not ready to disclose their secret to any researcher. I was opportune to get the required information from a colleague who himself is an ex-student of the federal polytechnic, IdahDEFINITION OF TERMSBanking System: This comprises of those financial institutions that have to do with the acceptance of deposits and giving of loans to customers. They include the central bank, the commercial banks, the merchant banks, and the development banks. Collateral: It is evidence, security property e.g sticks or bonds, pledged as security for repayment of a loan.Credit: Is money borrowed from someone or from an institution by agreement with the intention or promise to pay it back at a later date, with or without interest.To determine whether one needs credit or not some financial aspects must be looked into.