CONTRIBUTION OF COMMERCIAL BANK TOWARDS DEVELOPMENT OF AGRICULTURE SECTOR IN NIGERIA {A CASE STUDY OF UNION BANK OF NIGERIA PLC ILORIN}
ABSTRACT
This research work is carried out on the contribution of Commercial Bank towards development of Agricultural sector in Nigeria.
The work is the divided in to five chapters each. Dealing with a unique aspect of the study leading to the other looked at the managerial manner.
Chapter one deals with the statement of the problem, objective of the study, significant of the study, scope and limitation of the study, Research methodology, plan of the study, Definition of terms and the roles of commercial bank in agricultural development.
Chapter two of the research work critically deals with an overview of the Agricultural sector in Nigeria, Effort Nigeria Agricultural found cooperative bank towards Agricultural financing, problems of finding Agriculture by commercial banks and problems arising from government policies.
Chapter four shows the data presentation and analysis, Data presentation and analysis, Data presentation and analysis of personal data staff, analysis of responses received from bank staff, analysis of the responses to question directed to the customer farms and hypothesis tasting.
While chapter five deals with finding, summary, conclusion and recommendation.
TABLE OF CONTENTS
TITLE PAGE i
CERTIFICATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
PROPOSAL vi
TABLE OF CONTENTS vii
CHAPTER ONE
1.0 Introduction 1
1.1 Statement of the Problem 6
1.2 Objective of the study 7
1.3 Significant of the Study 7
1.4 Scope and Limitation of the Study 8
1.5 Research Methodology 9
1.6 Plan of the Study 9
1.7 Definition of Terms 10
1.8 The Roles of Commercial Bank in Agricultural Development 11
CHAPTER TWO
2.0 Introduction 15
2.1 An Overview Of The Agricultural Sector In Nigeria 18
2.2 Effort Nigeria Agricultural Found Cooperative Bank
Towards Agricultural Financing 19
2.3 Problem Of Finding Agriculture By Commercial Banks 20
2.4 Problems Arising From Government Policies 25
CHAPTER THREE
3.1 Historical Background Of Union Bank Plc 29
3.2 Organization Structure Of Union Bank 31
3.3 Research Methodology 31
3.4 Population Sample 31
3.5 Methods Of Data Collection 32
3.6 Methods of Data Analysis 33
3.7 Limitations To Methodology 34
CHAPTER FOUR
4.0 Introduction 36
4.1 Data Presentation and Analysis 36
4.2 Data Presentation and Analysis of Personal Data
of the Bank Staff 37
4.3 Analysis of Responses Received From Bank Staff 39
4.4 Analysis of the Responses to Question Directed to the
Customers Farms 42
4.5 Hypothesis Testing 48
CHAPTER FIVE
5.1 Finding 52
5.2 Summary 53
5.3 Conclusion 54
5.4 Recommendation 55
REFERENCES 56
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
In most development countries, like Nigeria agricultural sector is both the main traditional pursuit and key to sustained growth of the modern economy. Economic growth has gone hand in hand with agricultural production stagnation; in agriculture is the principal explanation of poor economic performance. While arising agricultural productivity has been the most important basis for successful industrialization. Among the roles conventionally ascribed to the agricultural sector in a growing economy are those of;
Providing adequate food for an increasing population supplying raw materials to a growing industrial sector, constituting then major sources of employment, earning foreign exchange through commodity export and providing for the product f the industrial sector.
Agricultural is thus seen as the backbone of the economy. Nigeria is a predominantly an agricultural economy and as long as she remains so the future of the sector in performing its role become important in the early 1950s agricultural play a crucial in our economic development as a nation.
It provided employment to millions of Nigeria and over seventy five percent {70%} of the labour force mostly from rural areas. In golden agriculture years, contribution from this sector accounted for about seventy percent [70%} of the Goss Domestic Product (GDP). Its percentage contribution however has fallen drastically in recent years due in part to boom in petroleum industry and the growth of industrial sector.
Having said all these, it is however unfortunate to say that the agricultural sector, despite its indispensability to the economic survival of the country is seriously affected by several predicaments which may under its contribution to the economy. One of the most predominant of them is that of the financial problem faced by the farmers. Much of the family holdings in Nigeria operate agriculture at small scale level.
The inadequate domestic food production was reflected in Nigeria’s massive food imports, especially in the 1970s to argument domestic supply.
To solve the financial problem faced by the framers commercial banks have crucial to play towards agricultural development in the nations economy. The commercial banks have to come to the aid of the extending credits to the farmers at reasonable rate of interested. They are also to provide them with essential consultancy programmes for better agriculture. Henceforth, theories of commercial banks remains paramount towards the development of agriculture in Nigeria, like every other developing countries of the world.
AGRICULTURAL DEVELOPMENT
In order to tackle some of the problem controlling the agricultural sector, the government put in place certain policies and programmes with a review of solving them. The genesis of those policies and programmes could be traced back to 1950s and 1960s when various credit institutions and programmes were established to support and finance agricultural development. Most important of these programmes include, Operational Feed the Nation [OFN] this was started in 1970 by then military regime as a mass enlightenment and mobilization campaign to raise agricultural output mainly through expansion of areas under cultivation. National Accelerated Food Production Programmes [NAFPP].Which was started in 1973 on a pilot phase but was extended to all state on the federation 1977 as a means to systematically build up national capacity for increase in food production through the development of a good package of technology other agricultural input and their integration with appropriate credit extension and marketing system.
Green Revolution Programme {GRP}: This was launched in 1980 by the defined National Party of Nigeria regime in the second Republic and was aimed at raising agricultural productivity through massive use of input such as fertilizer and improved seeds. Also the government has undertaken special project like the agricultural development project {ADP}, the Accelerated Development Area Programme {ADAPS}. The river basin and Rural Development Area Programme [ADAPS} as well as other measure both at federal and state levels to enhance agricultural production because of their realization of the numerous contribution of a highly developed agricultural sector could make the development of a highly developed agricultural sector could make the development of Nigerian economy. First and increase in export crop production should supplement out foreign exchange earnings. A successful attempt to bring agriculture to its pre-oil boom glory would strengthen our economy and reduce the risk of over dependence on crude oil alone, in addition it should always be born in mind that storage in food supply could and it has been experienced else where result in civil unrest and political crisis. It is unfortunate that despite all effort of the government to boost food production in Nigeria. The acute shortages of food supply still persist and this crisis situation is prevailing in the country.
THE ROLE OF COMMERCIAL BANK IN AGRICULTURAL DEVELOPMENT
The commercial bank helps the agricultural sector in developing countries in a number of ways:
They provide loans to trade in agricultural commodities. They open network branches in rural areas to provide finance directly to agriculturist for the marketing of their product for the modernization and mechanization of their fares for providing irrigation facilities for developing land e.t.c.
They also provide finance assistance for annuals husbandry, day farming, sheep breeding poultry farmer and horticulture. The small and marginal farmers and landless Agricultural workers, artisans and petty shopkeepers in rural are provided financial assistance through their regional rural bank. Thus the commercial bank meets though credit requirements of all types of rural people.
All these roles have contributed greatly to the development of agricultural sector of the economy essentially, there are three base categories of farmers and these include:
1. Small scale: Loan facilities are processed for approval without tangible security. People in this category are
mainly workers who use agriculture as a secondary business. Hence their employer stands as security for them in the event of default repayment.
2. Medium scale: Farmers under this category engage more in agricultural business. All such loans under this are forwarded to the head office for consideration from time with defined means of repayment.
3. Large scale: These are full time farmers who are engage in a large scale agricultural ventures as such before the companies in this types of business could be considered for approval at the head office such customer must be reputable with maintainable account and acceptable collateral securities. Henceforth, the roles of commercial banks remains paramount towards the development of agriculture in Nigeria, like every other developing countries of the world.
1.1 STATEMENT OF THE PROBLEM
Despite the high number of commercial banks established in Nigeria, yet the contribution attributed to them to words the development of agricultural development in the area of, insufficient flow of funds into agriculture which has contributed negatively towards achieving and increase in agricultural productivity. This study takes a critical look into the various methods to be use in providing solution to the problem in order to speed up improvement in agricultural productivity.
1.2 OBJECTIVE OF THE STUDY
The contribution of commercial bank towards agricultural development in the economy cannot be over emphasized. The overall objective of this study is to critically examine the role commercial banks towards the development of agricultural sector.
In addition this work is to,
⦁ Examine the importance of agriculture to Nigeria economy
⦁ Identify the problem facing Nigeria agricultural sector.
⦁ Analyze the loans and advance given by the commercial
banks to the agricultural sector. Finally, this research work is to provide solution aimed at solving problem facing agricultural development.
1.3 SIGNIFICANCE OF THE STUDY
The importance of this research work cannot be under estimated. It will be of benefit to various segments of the economy. To individual it will contribute to their knowledge on the financing of agriculture by commercial banks.
To the business commodity, this is to provide them with the needed research data to assist them to invest in agricultural business.
To the government, it is to help in policy formulation in relation to commercial banks and agricultural financing.
Again, more significant about this study is the benefit the students will derive from it. It will enable other researchers to make use of the finding obtained from the research work to increase their knowledge and further their research.
1.4 SCOPE AND LIMITATION OF THE STUDY
This research work covers all significant contribution of
Commercial banks towards agricultural development, using union bank of Nigeria plc Ilorin as the case study. The study examines the annual reports and statement of accounts wit other journals of the bank. One of the major limitations of this study is the collection of all relevant information from the bank. The coast of conducting the research is another limitation. There is also limited time in carrying out the research. However, effects will be made to provide current information concerning the study.
1.5 RESEARCH METHODOLOGY
In this sources work both primary and secondary sources of data is used in collecting information needed for the study. The primary sources of data consist of Oral interview with management and staff of Ilorin bank of Nigeria plc, Ilorin and its customers. Questionnaire is administered among the management, staff and customers of the bank other essential information is gathered from secondary sources include journals, billions textbook and magazines.
Data obtains is analyzed by using simple statistical model such as percentages table.
1.6 PLAN OF THE STUDY
The study is divided into five chapters, chapter one contains a brief background of the study statement of the problem, significance of the study, objectives of the study, scope and limitation of the study.
Chapter two contains a review of related literature.
Chapter three contains research methodology which includes method f data collection and method of data analysis.
Chapter four contains the presentation of the analysis of data.
Chapter five focused on the summary, conclusion and recommendation arising from the study.
1.7 DEFINITION OF TERMS
To gain a through understanding of this study, an attempt has made to define the following terminologies as they used in this research work.
AGRICULTURE: This is used in its common parlance which
includes production research and training in the fields of crops for story fishing and livestock.
FARMERS: Have been used in generic séance to cover the whole spectrum of agricultural production.
GROSS DOMESTIC PRODUCT {GAP}: This is an instrument which the commercial banks holds as a security against loans obtained in the event of default as a result of evasion or death.
ADVANCE: These are usually granted to the banks customer either by overdraft on current account or by loans upon a separate account.
OVERDRAFT: This is an arrangement by which an account holder is allowed access to fund in excess of his balance subject to stipulates limit and duration, is the common form of short-term credit.
CREDIT: This is sued to refer property {among} handed to a customer by a banker with the promise to repay the sum given at a future date.
INTEREST: This refers to the money which is paid for a loans or the use of money. This is usually expressed as a percentage of the total loan.
SAP: Central Adjustment Accidentals
CBN: Central Bank of Nigeria
BIOA: Bangui International Pour Enrique Accidental
NACB: Nigeria Agricultural and Cooperative Bank
1.8 THE ROLE OF COMMERCIAL BANKS IN AGRICULTURAL DEVELOPMENT
The commercial banks help the agricultural sector in developing countries in a number of ways.
They provide loans to traders in agricultural commodities. They open network branches in rural areas to provide agricultural credit.
They provide finance directly to agriculturists for the marketing of their produce, for the modernization and mechanization of their farms for providing irrigation facilities for developing land e.t.c. They also provide financial assistance for animals husbandry, dairy farming, sheep breeding, poultry farming and horticulture. The small and marginal farmers landless agricultural workers artisans and petty shopkeepers in rural areas are provided financial assistance through their regional rural banks. Those regional rural bank operate under as commercial bank.
All these roles have contributed greatly to the development of agricultural sector of the economy essential. There are three base categories of farmers and these include:
i. Small scale: Loan facilities are processed for approval without tangible security people in this category mainly workers who use agriculture as a secondary business. Hence, their employer stand as security for their in the event of default repayment {RBRDAs} as well as other measure both federal and state level to enhance agricultural productivity and output. The governments have given such priority to agricultural production because of their realization of the contribution of a highly developed agricultural sector could make the development of Nigerian economy. First and increase in export crop production should supplement our foreign exchange earning. Successful attempts to bring agriculture to its pre oil boom glory strengthen our economy and reduce the risk of over dependence on crude oil alone. In addition, it should always be boom in mind that storage in food supply could and it has been experienced elsewhere result in civil unrest and political crisis. It is unfortunately that despite all efforts of the government to boost food production in Nigeria, the acute shortage of food supply still persists and this crisis situation is prevailing in the economy.
AGRICULTURAL DEVELOPMENT
In order to tackle some of the problem confronting the agricultural sector, the government put in place certain policies and programmed with a view of solving them. The genesis of those policies and programmed could be traced back to 1950s and 1960s when various credit institution and programmed were established to support and finance agricultural development. Most important of these programmes include operation feed the nation {OFN} this was started in 1976 by military regime as a mass enlightened and mobilization campaign to raise agricultural output mainly through expansion of areas under cultivation.
National Accelerated Food Production Progrmmes {NAFPP}.which was started in 1975 on a pilot phase, but was extended to all state on the federation 1977 as a means to systematically build up national capacity for increase food production, through the development of a good package of technology, other agricultural input and their integration with appropriate credit extension and marketing system.
Green Revolution Programme {GRP}: This was launched in 1980 by the defined National Party of Nigeria regime in the second Republic and was aimed at raising agricultural productivity through massive use of input such as fertilizer and improved seeds. Also, government has undertaken special project like the agricultural development project {ADP}, the Accelerated Development Area Programme {ADAPS}. The river basin and Rural Development Authorities.
ii. Medium scale: Farmers under this category engage more in agricultural business. All such loans under this are forwarded to the head office for consideration from time with a well defines means of repayment.
ii. Large scale: These are full time farmers who are engage in large scale agricultural ventures. As such considered for approval at the head office such customer must be reputable with maintainable account and acceptable collateral securities.
.