Monetary Policy Effect on the Nigeria Agricultural Sector Growth 1980 – 2020.
Publication Date: 20/09/2024
Author(s): Okafoforcha Chika Maureen, Anumudu Charles N., Uwazie Iyke Uwazie, Sule Muhammed.
Volume/Issue: Volume 7 , Issue 4 (2024)
Abstract:
This study explored the effect of monetary policy on the Nigeria agricultural sector growth, from 1980-2020. The objective are to; ascertain the significant effect of Central Bank of Nigeria monetary policy rate (MPR), open market operations and cash reserve ratio implementation on commercial banks’ credit lending rate to Nigeria agricultural sector, and examine the selective sectoral credit control policy of Central Bank of Nigeria and how it affects commercial banks’ credit lending rate to Nigeria agricultural sector.. The study employed the following advanced econometric and statistical techniques; Augmented Dickey-Fuller (ADF) tests, Co-integration Test, Vector Error Correction Model (VEC) and Granger Causality. Based on the above econometric and statistical techniques conducted, it was observed that the CBN monetary policy rate (MPR), open market operations and cash reserve ratio implementation has significant effect on commercial banks’ credit lending to the Nigeria agricultural sector. Our results indicated that there is a positive significant effect of CBN selective sectoral credit control policy (agricultural credit guarantee scheme fund (ACGSF) on commercial bank lending to Nigeria agricultural sector within the period of the study 1980 to 2020. Based on the findings, the researcher recommends that; increase in cash reserves ratio and the monetary policy rate cannot be used to influence stabilized growth from commercial bank lending to Nigerian agricultural sector especially in the short run. Changes in the structural changes effect can be used to stimulate growth in the commercial bank lending to Nigeria agricultural sector. The positive controlled Liquidity ratio and volume of broad money stock/cash balances in the hands of the various economic units could be directly manipulated for a more effective monetary policy management than that of Open market operations as proxy and represented by Aggregate Central Bank of Nigeria Treasury Bill (CBNTB).
