THE ROLE OF COMMERCIAL BANK IN AGRICULTURAL FINANCING IN ENUGU STATE

ABSTRACT

The object of this study is to determine the vital role played by commercial banks in Agricultural financing in Enugu State, which has been a major handicap to Agricultural Development today.

The study arose from the fact the question to achieve self sufficiency in food produce is one of the highest priority areas facing most of the world’s people today

Chapter one deals with statement of the problems, introduction, purpose and significant of the study, scope mid limitation of the study, definition of term.

Chapter two deals with reviews of related literature, which includes policy and means to boast agricultural scheme, types of loan factor and in agricultural financing.

Chapter three deals with research design & methodology. Sources of data location of data, and method of data collection.

Chapter four deals with finding and summary.

Chapter five deals with conclusion and recommendation.

TABLE OF CONTENT

CHAPTER ONE

1.0. INTRODUCTION

1.1.            STATEMENT OF PROBLEM

1.2.            PURPOSE / OBJECTIVE OF STUDY

1.3.            SIGNIFICANCE / IMPORTANT OF STUDY

1.4.            DEFINITION OF TERMS

CHAPTER TWO

2.0. REVIEW OF RELATED LITERATURE.

2.1 POLICY& MEANS TO BOAST AGRICULTURAL

2.2 FINANCING

2.3 AGRICULTURAL CREDIT GUARANTEE SCHEME

2.4 AGRICULTURAL INSURANCE SCHEME

2.5 FACTORS AND RISK IN AGRICULTURE IN

2.6 NON AGRICULTURAL FINANCING.

2.7 CONSTRAINT TO AGRICULTURAL FINANCING BY BANKS.

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

3.2 DATA COLLECTION

3.3 LOCATION OF DATA

3.4 SOURCES OF DATA

CHAPTER FOUR

4.0 SUMMARY OF FINDING

CHAPTER FIVE

5.0 CONCLUSIONS AND RECOMMENDATION

CHAPTER ONE

INTRODUCTION

Agriculture is defined as the science or practice of farming ie cultivation and production of raw materials for industries. It is well known that farming is the oldest occupation in the world and indeed it remain till date, one in which the largest number of people are engaged. The vast majority of the population of the world, depend on its more complex sense, agriculture is basically concerned with the production of food, which is the basic necessity of life.

 The problems of capital security in agricultural production in most developing nation is generally giving cause for concern, because of the huge capital involvement. As a result of this development, subsistent agriculture now cultivate crops only for themselves and their immediate families hence the need for commercial banks to participate actively in agricultural financing materials for key industries and a major foreign exchange earners has further added to its premience among all human occupation.

As a business, it cannot be carried out extensively unless funds are available for maintenance replacement and capital equipments procurement and for other expenses.

THREE TYPES OF CREDIT ARE USUALLY REQUIRED.

(A) Short term credit to financial yearly planting operations, seed, fertilizer and farm expenses until the crop is sold.

The amounts involved here might not be credit in most predominantly felt by small farmers have little or no savings upon which to hang on.

(B) Medium term loan (longer than one planting year but less than three years). This is needed for acquisition of breeding stock and cheap with relatively short life.

© Long-term credit necessary to acquire major machines and equipments repairs and maintenance of farm lands, buildings, storage facilities.

1.2     STATEMENT OF THE PROBLEM

In this age of expanded business activities around the world especially in Nigeria. Agriculture more than ever needs financial assistance in form of bank loan to meet the increasing need for food production.

Obtaining such loans however has not be easy for farmers as a result of collection security, lack of proper accounting records and management among other limiting factors.

In spite of the importance of oil in the economy today, agriculture still remains the main stay of the Nigerian economy as it provides the greatest avenue for employment income of food for the Nigerian population. Its intrinsic position as a source of raw material for agricultural credit.

Agricultural credit therefore is a necessary ingredient in agricultural practices and in farm productivity especially it supplied on sufficient quantity and efficiently used. However, credit is only one of the “essential” for expansion and modernization, for credit pe-se, is not entirely inevitable, but a necessary key to a more prosperous future.

The commercial banks on their part has been replaced at tight situation in their bid to achieve what might be an optional level in banking lending.

1.2     PURPOSE / OBJECTIVE OF STUDY

It is a living concept among the people today that low returns to agriculture are entirely as a result of lack of finance. It is against this background supported by the statement of problem that the researcher wishes to identify and analyze other issues raised along side finance (capital).

As could be see capital is the life wire of any ventures whose capital base shaky could be said to be in serious Jeopardy. If this single factor is lacking, therefore then other numerous problems like labour however, adequate training like learning of new agric skills and high marginal production per-worker will automatically develop. It therefore means that to ascribe the lending role of finance would be grievously.

The evaluation fall within the purpose of the study.

1.3    SIGNIFICANCE / IMPORTANT OF THE STUDY

It is a living concept among the people today that low returns to agriculture is entirely as a result of lack of finance. It is against this background supported by the statement of problems that the researcher wishes to identify and analyze other. Issues raised along side financial.

1.4    LIMITATION OF THE STUDY

The scope of this study could have been unlimited but for the complex nature of the research work which ordinarily involved getting in touch with the respondent who often times are reluctant towards giving information needed.

The gectic interview also involved shutting from central bank of Nigeria, Afric bank plc and Ministry of agriculture in search of relevant information for the making of the project. Furthermore, one can agree that a research in commercial in Nigeria is very extensive and clumber some henries a singular sample firm will be used to carry out the study and the result obtained generalized since the banks operate within the same economic bounds.

1.5    DEFINITION OF TERMS

  Commercial banks: This strictly refers to those retasl bankers who deal on people’s deposit and whose business includes as follows

(a) Accepting deposit like time deposit savings deposit fixed and demand deposit. Makings payment on behalf of their customers to others in form of cheques, mails, telegraphic transfer and certified cheque etc.

(b) Discounting of bill exchange and credit.

© Granting if loan facilities

(d) Dealing on foreign exchange

(e) Making bank references safekeeping of documents and valuable, actual as executors, trustee and also for stock exchange and other services.

 Ventures: This refers to various undertaking of life people do to survive.

Loans: Properly owned by on which by mutual consent is used temporarily by other also the transaction resulting in that use.

Long-term debt: Debts, which must be paid on year or more after signing of the loan agreement.

 Working capital: This refers to the net of current assets over the current liabilities. It is a major factor in assessing a company’s financial strength.

1.1 STATEMENT OF THE PROBLEM

In this age of expanded business activities around the world especially in Nigeria. Agriculture more than ever needs financial assistance in form of bank loan to meet the increasing need for food production.

Obtaining such loans, how ever has not be easy for farmers largely as a result of collateral security, lack of proper accounting records and management among other limiting factors.

In spite of the importance of oil in the economy today, agriculture still remains the main stay of the Nigerian economy as it provides the greatest avenue for employment income of food for the Nigerian populace.

Its intrinsic position as a source of raw material for agricultural credit.

Agricultural credit therefore is a necessary ingredient in agricultural practices and in farm productivity especially it supplied on sufficient quantity and efficiently used. However credit is only one of “essential” fro expansion and modernization, for credit parse. Is not entirely inevitable but a necessary key to a more prosperous future.

The commercial banks on their part has been replaced at light situation in their bid to achieve which might be an optional level in banking lending.

The years been playing the spectators role, does not wish to continue that way and thus assumed and advisory role it is in the light of the above that this study is undertaken to provide some solutions to the numerous problems association with commercial banks loans especially to the agricultural sector

1.2 PURPOSE /OBJECTIVES OF STUDY

It is a living concept among the people today that low returns to agriculture is entirely as a result of lack of finance. It is against this background supported by the statement of problem that the researcher wishes to identify and analyze other issues raised along side finance (capital).

As could be seen capital is the life worker of any ventures whose capital base is shaky could be said to be in serious Jeopardy.

If these singular factors is lacking, therefore then other numerous problems like labour however adequate training like learning of new agric skill and higher marginal production per worker will automatically develop.

It therefore means that to ascribe the lending role of finance would be grievously the evaluation fall within the purpose of the study.

1.3 SIGNIFICANCE / IMPORTANCE OF THE STUDY 

It is a living concept among the people today that low returns to agriculture is entirely as a result of lack of finance. It is against this background supported by the statement of problems that the researcher wishes to identify and analyze other. Issues raised along side finance.

1.5 DEFINITION OF TERMS

Commercial BANKS: this strictly refers to those retail bankers who deal on people’s deposit and whose business includes as follows

(a) Accepting deposit like firm deposit savings deposit fixed and demand deposit. Making payment on behalf of their customers to others in the form of cheques, mails, telegraphic transfer and certified cheque etc.

(b) Discounting of bill exchange and credit

© Granting of loan facilities.

(d) Dealing on foreign exchange.

(e) Making bank references safekeeping of documents and valuable, actual as executors.

v  VENTURES: This refers to various undertaking of life people do to survive.

v  LOANS: properly owned by on which by mutual consent is used temporarily by other also the transaction result in that use.

v  LONE TERM DEBT: this refers to the debts; which must be paid on year or more often signing of the loan agreement.