THE ROLE OF COMMERCIAL BANKS IN AGRICULTURAL GROWTH AND DEVELOPMENT IN NIGERIA (A CASE STUDY OF KADUNA STATE)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Agriculture involves the cultivation of land, raising and rearing of animals and raw materials for industries. It involves cropping livestock, forestry, and fishing, processing and marketing of these agricultural products.

Food is man’s most important basic need before those of clothing and shelter. It is provision therefore, has been the major concern of man from the past years since it is both an essential condition and sinequanon to life. Agriculture being the provider of food can then be concluded as the life wire of any nation and thus be concluded as the life wire of any nation and thus its importance cannot be over emphasized.

When Nigeria gained their political Independence in 1960, agriculture was dominant sector of the economy. It contributed over 65% of the country‟s Gross Domestic Product (GDP) and provided the bulk of the foreign exchange earnings through the foreign exports of the cash crops. The sector catered adequately for nearly all food requirement and raw materials for industry in the country. Agriculture performs a number of functions in an economy such as:

STATEMENT OF THE PROBLEM

Nigerian agriculture is confronted with many problems which ranged from low yield to low productivity and inadequate facilities among others. Oyatooye (1981) was on the same path when he noted that the problem of agriculture in Nigeria can be discussed under four headings.

1. Technology

1. Marketing

III.   Finance and Government

Such problems include problems of providing adequate extension services, agricultural inputs, storage facilities, agricultural credit, marketing information and efficient marketing arrangement, infrastructures such as feeder roads efficient power supply and institutional reforms where necessary. William (1981) pointed out that, the major problems facing Nigeria today are the needs to transform her agricultural industry from one traditional input with low productivity to one which enables her to meet the rising expectations of her people and to correct the social and economic imbalance created by lopsided development between her rural and urban areas which have encouraged the youths and others to migrate from rural areas.

His statement is a valid one as when it was made from we have seen, the Nigerian economy is characterized by a high degree of rural to urban drift in search of greener pastures leaving the farm land to old aged men who are unable to provide all the food requirements of the growing population. This is responsible of the growing population. This is responsible for the high cost of food as there is pressure on the little produced.

Adekanye‟s assertion (1988) when he stated that: it is a common knowledge that present farmers and artisans who the back of the rural population do not get adequate and timely loans from financial institutions and they have no collateral and equally they do not get supplies of raw materials of standard quality even at the market place as they come under the ditches of rich farmers and sellers in the urban areas. The need for setting up of rural based commercial banks is very urgent.

​OBJECTIVE OF THE STUDY

The main objective of this study is to assess the role of the commercial banks in agricultural development in Nigeria from 1986-2009. Specifically the study tends to be achieving the following objectives.

1. To access the scope and achievements as well as highlight new role of Nigerian Commercial Banks to Agriculture.

1. Identify the inherent problems of agricultural financing which have hindered the smooth flow of credit from banks to agriculture.

1. To offer solutions to identified problems.

HYPOTHESIS OF THE STUDY

H0: Commercial banks have not played a major role in agricultural growth and development in Nigeria

H1: Commercial banks have played a major role in agricultural growth and development in Nigeria.

SIGNIFICANCE OF THE STUDY

This study is useful in many ways.

Firstly, Nigerian farmers can know the type of credit or assistance offered by Nigerian Banking Industry and the benefit from them.

Secondly, it will help to update knowledge on how the banks especially commercial banks in Nigeria, thus making it useful for other researchers, schools and readers.

Thirdly, it will enable the Nigerian government to take advantage of the suggestions and more result oriented policy towards boosting agricultural production in Nigeria.

Finally, the salient findings of this study will also make the farmers to be more result oriented in agriculture.

SCOPE AND LIMITATION OF THE STUDY

The research is on the role of commercial banks in agricultural growth and development in Nigeria using Kaduna state as a case study.

LIMITATION OF THE STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.