Agricultural Financing and Economic Growth in Nigeria

Abstract:

The study examined the influence of agricultural financing on economic growth in Nigeria over the period 1981 to 2019. The objective of the study is to the impact of the long-term relationship between various forms of agricultural financing on Nigeria’s economic growth. The study employs the stationary test, the co-integration test, the error correction model and the Granger causality model. All variables were stationary at the first difference, and the co-integration test evidenced a long-run relationship. The study identified, in the long run, that; the agricultural credit guarantee scheme fund shows a positive and significant influence on the gross domestic product in Nigeria. The commercial bank loan and community –micro-finance bank loan shows a positive and significant influence on the gross domestic product in Nigeria within the reference period. In light of the findings, the study concluded that all the variables employed predict Nigeria’s gross domestic product. Furthermore, the granger causality results show a demand following a role as against supply leading role, revealing that increase in output level in Nigeria significantly support/promotes agricultural financial instrument. The study recommends that the Federal government should motivate commercial banks to provide adequate credit facilities to the Agricultural sector through moderate bank lending rates for ease of farming business in Nigeria. Proactive campaigns on the availability of credit facilities for farmers to enable them to have access to loans at a single-digit interest rate. This could be achieved through social media, door-to-door vibes, town hall meetings and market squares. Government should create an enabling environment for farmers through the provision of adequate security, pest control measures and seedlings.