A STATISTICAL SURVEY OF AGRICULTURAL LOAN AND ITS EFFECTS ON FARMING ACTIVITIES IN NIGERIA

A STATISTICAL SURVEY OF AGRICULTURAL LOAN AND ITS EFFECTS ON FARMING ACTIVITIES IN NIGERIA

Background to the Study

Since the discovery of crude oil in Nigeria, farming has been plagued by discrepancies and relegation. Agriculture is a vital part of the Nigerian economy. Its importance in economic progress cannot be overstated. According to Umar (2004), agriculture contributed for 40 to 60 percent of national GDP between 1960 and 1976, and agriculture employs 50 to 80 percent of the labor force. Agriculture has an important part in Nigeria's economic growth. These aim to enhance food supply for internal consumption and export, as well as to create more jobs.

Despite its critical position in the country's economy, agriculture has had its fair share of issues, leading to a downturn and bad performance in the agricultural sector. The primary issue is a lack of enough finance.

Agricultural operations in Nigeria have been steadily declining as a result of increased government and other business finance, such as commercial banks. Efforts have been made by past Nigerian administrations to revitalize agriculture operations in Nigeria by providing loan arrangements so that agriculturists, the most majority of whom are ordinary Nigerians, may use these loans to increase their production base and hire labor. When it comes to getting these cash to the real rural farmers who are in desperate need of this aid, agricultural finance in Nigeria has shown to be rather successful. The importance of an adequate agricultural loan on agricultural activities cannot be overstated. A number of things must be done correctly for the agricultural loan system to be functional again. Agricultural loans are viewed as a catalyst that activates other production variables and makes underutilized capabilities operational for higher output (Ijere, 1998). Thus, agricultural loans are vital in agricultural and rural development because they allow farmers to reap economies of scale, move into new sectors of production, apply new technology, and empower them to offer utilities to a growing market.

Statement of general problem

Because the majority of farmers are rural inhabitants, there hasn't been a clear manner of effectively funding agricultural operations in a developing country like Nigeria. Another issue is the difficulty these farmers have in obtaining government loans because the majority of them are peasants. A major issue that prompted us to conduct this research is determining the percentage of success recorded in assisting farmers, particularly those in villages, with loans. Another major issue is determining whether increased agricultural loan assistance would actually reduce unemployment and increase productivity.

Aims and Objectives of the study

The chief objective or aim of this study is to know the level of success recorded in assisting rural farmers to increase productivity.

1. To know the difficulties encountered by those farmers in assessing these loans
2. To know which institutions have been really supportive in assisting the farmers to increase productivity.
3. To know if increased assistance would mean increase in employment and productivity.
4. To know if there is a relationship between agricultural credit or loan and the level of productivity in Nigeria. We are also interested in knowing the nature of this relationship if any.
5. To know if there is equally a relationship between agricultural loan and the employment level in Nigeria. The nature of this relationship ( if any ) is also important to us.

 

Significance of the study

A major significance of this study is to know the level of success in assisting farmers in the rural areas.

Another significance of the study is to know if there is a relationship between increased governments financial assistance and the level of their productivity. The following are the other significances of this study:

a) How are loans disbursed?

b) What are the causes and effects of default in loan repayment?

c) What methods have the bank developed in recovering their loans?

d) What are the problems faced by farmers in obtaining this loans and what is their attitude towards repayment?

e) Do farmers generally like assessing these loans?

f) To know how successful agricultural financing has been in recent years and reasons.

g) Does adequate agricultural funding increase employment?

h) how does agricultural loans increase farming activities.

 

Scope and limitation of the study

This study is basically on the effect of agricultural loan on farming activities in Nigeria a case study of ohaofia local government area of Abia state. Another scope of the study is to know how agricultural loan in Nigeria has a relationship to employment and finally to know the level of satisfaction of the end users of this loans.

Limitation

It is pertinent to mention the limitations of this research work, chief among the limitations is the difficulty in administering the questionnaire in ohaofia local government area, respondents response wasn’t as expected in that they were some information required that weren’t given.

Notwithstanding, in the highlighted limitation above, it is hoped that this research will be useful to theNigerian government, its citizens, farmers and agricultural organizations that may be interested in this work.

 

Definition of terms

Loan: Money that an organization such as a bank lends and somebody or group of people borrows.

Agriculture: The science or practice of farming.

 

Research Hypotheses

The research hypotheses are as follows:

HYPOTHESIS 1

H0: There is no significant relationship between agricultural loan system and employment level in Nigeria

H1: There is a significant relationship between agricultural loan system and employment level in Nigeria

Level of significance: 0.05

Decision rule: reject H0 if p-value is less than the level of significance. Accept H0 if otherwise.

We are also interested in knowing the nature of this relationship, if any.

HYPOTHESIS 2

H0: There is no significant relationship between agricultural loan system and agricultural output in Nigeria.

H1: There is significant relationship between agricultural loan system and agricultural output in Nigeria.

Level of significance: 0.05

Decision rule: reject H0 if p-value is less than the level of significance. Accept H0 if otherwise.

We are also interested in knowing the nature of this relationship (if any).

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