Farm Credit Influence on Agricultural Sector Performance in Nigerian Economy
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Date
2024-07-28
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IJOBCA Journal of Business, Coommuncation and Administration, Federal Polytechnic Ede, Osun State
Abstract
Agriculture is the dominant sector and main stay of Nigerian economy. Farm credit is considered as a factor of production that could facilitate production in the sector. The study examines the dynamic relationship between farm credit and agricultural sector. Time series data (1987 – 2016) for the study was obtained from Central Bank of Nigeria (CBN) Statistical Bulletin and Annual reports, National Bureau of Statistics (NBS), World Bank Statistics and International Institute for Tropical Agriculture (IITA Ibadan). The sample points (1987-2016) were purposively chosen for the study because 2016 was a year of recession for the economy particularly agricultural sector. Data collected were analyzed using single equation regression (bivariate) model to estimate the parameters. Descriptive and inferential statistics were used to analyze the data. The coefficients of determination R2 for linear and log linear (exponential) were 40% and 27% to explain variability in the variables. The correlation coefficient (r = −0.46, p = 0.01) reflected a negative relationship between farm credit and agricultural real gross domestic product. The findings indicated that agricultural real gross domestic product had a sluggish average growth rate of 31.86% and output expansion path in the sector remained inelastic. Conclusively, farm credit had negative impact on the agricultural sector performance, therefore the study recommended that supply, allocation, and disbursement of farm credit to agricultural sector must be monitored. Delay effect in the delivery of farm credit must be avoided. Moreover, cost of borrowing funds by operators in the sector must be mitigated with low interest rate regime and less conditionalities.
Key words: Agriculture, Farm credit, Gross Domestic, Product, Value-added.
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Survey/Descriptive Research Study/Design
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Citation
Shitu, A. M. (2024).