THE ROLE OF THE NIGERIAN AGRICULTURE AND CO-OPERATIVE BANK IN AGRICULTURAL FINANCING (PROBLEMS AND PROSPECTS)

ABSTRACT:

This study critically examines the role of the Nigerian Agricultural, Co-operative, and Rural Development Bank (NACRDB) in agricultural financing, with a focus on the challenges and prospects associated with funding the agricultural sector in Nigeria. The bank plays a pivotal role in facilitating credit to individual farmers and agricultural cooperatives, aiming to boost productivity and promote rural development. However, the sector is inherently vulnerable to a range of structural and economic challenges that hinder efficient credit utilisation and repayment. Key issues include a high incidence of loan defaults, driven by borrowers’ inability to repay principal and interest within stipulated timelines. Factors such as illiteracy, lack of awareness, poor infrastructure, inadequate risk management frameworks, loan diversion, and unsystematic risks make the agricultural sector a high-risk investment environment. Furthermore, political instability, inconsistent government policies, and the absence of effective collateral systems exacerbate the problems of agricultural lending. This paper highlights the reasons for special funding needs in agriculture and explores how NACRDB can mitigate these challenges through improved loan monitoring, farmer education, and policy reforms. The study is grounded in both secondary and limited primary data sources, offering practical insights for financial institutions, policymakers, and agricultural stakeholders aiming to strengthen rural credit delivery systems.

Keywords:

agricultural financing, NACRDB, rural development, loan default, cooperative farming, agricultural credit, Nigerian agriculture

DOWNLOAD COMPLETE RESEARCH MATERIAL NOW! NGN3,000

CHAPTER ONE

STATEMENT OF THE PROBLEM

The role of the Nigerian Agricultural and Co-operative Bank can not be overemphasized. The NACB provides short-term, medium, and long-term finance to the Agricultural sector of the economy. This is aimed at making farmers increase their productivity, as well as adopting the mechanized system of farming. Anyanwu (1993) stated that it is also meant to encourage or create employment opportunities for the unemployed in the nation.

However, in spite of all the effort being made, the objective of an increase in productivity can not be said to have been attained. Many people feel reluctant to go into agriculture; instead, they seek other job opportunities. On the side of the NACB, it feels reluctant to extend credit to some categories of farmers.

What are the reasons for these setbacks? Could it be as a result of the rate of interest on the loan amount? Could it be a result of loan default? Could it be as a result of the amount being requested? Could it be as a result of the nature of the collateral involved?

Therefore, the researcher intends to investigate the reason for all these setbacks.

RATIONALE OF STUDY

With respect to the rationale of the study, the researcher intends to justify her reason for laying emphasis on this particular topic.

However, what motivated the researcher to write on this topic is as a result of the prevailing problems facing the NACB in Agricultural financing in the society.

Therefore, this study or research work will contribute immensely to improve the in-depth knowledge of those in the Agricultural sector as well as the NACB in respect to the role of NACB in Agricultural financing.

SIGNIFICANCE OF THE STUDY

The usefulness of this research work can not be exhausted. However, individuals and groups of individuals will benefit from this research work, mostly those who are ignorant of the essence of the establishment of the NACB.

Also, those in the Agricultural sector will benefit from this research work. This is by having in-depth knowledge on how the NACB operates in terms of extending short, medium, and long–term credits to farmers.

Conclusively, those in various schools of agriculture and other institutions of higher learning will benefit immensely from this work

DEFINITION OF TERMS

AGRICULTURAL FINANCING:- According to Uguwanyi (1999), Agricultural financing is the sourcing of funds and making them available for agricultural production and uses. That is, it involves the acquisition and utilization of funds for agricultural purposes.

NACB, Nigeria Agricultural and Cooperative Bank, was established to fill the financial gap in terms of credit extension to the cooperatives and the agricultural sector.

NACRDB – Nigerian Agricultural, Co-operative and Rural Development Bank, which was formed as a result of the merging of inability of the NACB to meet its responsibilities.

NECHANISED SYSTEM OF FARMING:-  This implies the system of farming with the aid of  machines, such as tractors, bulldozers or Caterpillars, Ploughs, etc.

COLLATERAL: This is also referred to as security. It can be described as an item which a borrower deposits to a bank in hence of the loan amount, of which the bank will later consider in the case of default by the borrower.

DOWNLOAD COMPLETE RESEARCH MATERIAL NOW! NGN3,000

FIND OTHER RELATED TOPICS