A major problem of most
developing countries of which, one, is their inability to manage their
resources effectively, it does not matter whether the country is rich or poor,
big or small. Thus, whether the country has limited resources, it tends not to
display enough imagination in the management of what IS available. On the
other hand, where the country is lucky to have abundant resources, everyone
concerned, with the management of what is available or it's affairs is so
overwhelmed that they are unable to sort out their priorities. Nigeria is
primarily an agricultural country and it is richly endowed with agricultural
resources (Eubuomwa, G.O. 1997). There is hardly any need to stress the importance of
agriculture in the economic life of this country. From the early 1950 to the
1960, agriculture played a very big role in the economic development of Nigeria
as a nation, as it provided the necessary resources for export to earn the much
needed foreign exchange as at that time.
According to Anyanwu, J.C.
(1997), inspite of urbanization and the oil
boom in the 70's, agriculture still serve as the sustainer of the Nigerian
economy. Furthermore, a greater percentage of the country's foreign exchange is
contributed by the agricultural sector due to the exportation of cash crops and
other agricultural products.
This sector also provides the
bulk of employment, income and food for the population and also provides the
raw materials for agro-based industries as well as market for industrial goods.
Most of Nigeria's agriculture is centred around small scale family holding,
using the family labour force and occasionally using hired labour during
planting, weeding and harvesting seasons. The average farmer relied on his own
capital as well as non-financial institution's source for working capital e.g.
borrowing from friends, local money lenders and traders. Loans from such
sources are usually made directly to the borrowers by the lenders. This method
of borrowing is common in areas where individuals are familiar with and share
confidence in one another. This form of financing helps to reduce
administrative delays associated with the banks form of financing agricultural
projects. This quality of the nonfinancial institutions is made very popular among
Dwivedi, D.N. (2002), describes
monetary policy as an essential programme of action undertaken by the monetary authorities generally the Central Bank of Nigeria (CBN),
to control and regulate the supply of money within the public an the flow of
credit with a view to achieving predetermined macro economic goals. The reforms
include, but are not limited to currency and exchange rate adjustments. They
include others as well e.g. better balancing of public sector accounts,
increased use of cheques and efficiency in the progressive monetization of the
economy, initiation of specialized banking institutions, encouragement of
certain public organizations to patronize the domestic capital market, genuine
decentralization of the Central Bank of Nigeria operative structure, permeation
of legitimate banking into the rural and urban areas and changes in the legal
foundations monetary organization, aimed at redirecting the flow of inevitable
funds in accord with policy goals.
STATEMENT OF RESEARCH PROBLEMS
The following problems, which
are pertinent to the issue under investigation, are:
1. Problem to evaluation the
impact of interest rate on agric financing.
2. Problem to identify the
effect price stability on development of agriculture in Nigeria.
3. To evaluate the role of
monetary policy in agricultural sector and financing in Nigeria.
4. In adequate supply of
fertilizers despite the huge amount spent by the government on subsidy,
exchange rate policy reversal, trade reform lapses and interest rate policy
THE AIM AND OBJECTIVES OF THE STUDY
This research work aim at
achieving the following objectives.
To evaluate the
impact of interest rate on agric financing.
To identify the
effect of price stability on the development of agric sector.
To evaluate the role
of exchange rate on Agricultural financial in Nigeria.
i. How does monetary policy influence agricultural financing?
ii. What measures are available
to the agricultural product to ensure that the operation is effectively carried
iii. What impact/effect does
monetary policy have on· banking industry?
iv. How does the money policy ensure that agricultural product
in Nigeria are well organized and arranged.
v. To evaluate the
agricultural product so as to yield good result for the economy.
1.5 THE STATEMENT OF RESEARCH HYPOTHESES
1. Ho: That there is no strong relationship
between interest rate an Agric
HA: That there is
strong relationship between interest rate and Agric financing.
2. Ho: That there is no strong relationship
between sustainable price level and
development of agric sector.
HA: That there is
strong relationship between sustainable price level and development of agric
3. Ho: That there is no strong relationship
between Exchange rate and
development of agric sector
H1: That there is
strong relationship between Exchange rate and development of agric sector.
1.6 RESEARCH METHODOLOGY
Methods of study: This study employ the use of Econometric Analysis to test
for the relationship between dependent and independent variables.
Sources of data: The data shall be collected from secondary source of data
generation basically through federal of statistics, CBN and other relevant
X1 = Price
X2 = Interest
X3 = Exchange rate
X3 = GDT
GDP = bo +
bi PR x + b2lRT + b3 EXR +
b4 GD.T + Ut
SIGNIFICANCE OF STUDY
This research project is
relevant due to the fact that it will help individual, firm, and government
Individuals: show the relationship negative or positive that exists
between monetary policies and agricultural financing.
Government: This is important because it will demonstrate how monetary
policies can be used effectively in financing agriculture in Nigeria. Additionally, this work stresses the need for
First Bank of Nigeria to pay more attention to this sector as well as
Firm: It assist an organization in the determining the most
favourably mechanism to be used in an agricultural sector.
1.8 THE SCOPE AND LIMITATION OF STUDY
This research work hopes to
centre on the monetary policies on agriculture in the Nigerian monetary
activities. It is also limited to the Agric business and small medium
Enterprise Department of First Bank of Nigeria from 1980-2009.
A study of this nature like any
other study is not without limitation. The major limitation encountered was
that of data collection, since data were collected from various publications,
therefore personal interaction and collection of data could not be undertaken.
However, as much as data needed to be reconstructed, to the form desired would
have to be taken as factual.
Also, the problem of obtaining
up to data statistics impede the study seriously, as some of the data were not
available as at the period of
conducting the study. Other related problems include time factor coupled with
1.9 DEFINITION OF TERMS
Agriculture involves the cultivation of land; raising and
rearing of animals for the purpose of production of food for man, feed for
animals and raw materials for industries. It involves cropping, livestock,
fishery, processing and marketing of these agricultural products.
POLICY: G.K. Shaw (Jhingan, M.L. 2004)
defines it as any conscious action undertaken by the monetary authority (Central
Bank of Nigeria) to change the quantity availability or cost of money i.e.
This means the Central Bank of Nigeria. It is the highest
monetary authority in Nigeria.
It means Agricultural Credit Guarantee scheme, set up by
the government to facilitate farmers access to bank credit.
These are Non-Governmental Organizations. They are private
organization that engages in activities aimed at reducing sufferings, promoting
environmental development and providing basic social and financial services
through the adoption of community based programmes.
This means Bank of industry, which aims at improving credit
Finance is the livelihood of any enterprise. It is a key
factor of production, with finance; an enterprise can acquire other factors of
production; such as labour, machinery/technology and management as well as raw
materials and embark on any business activity.
Gross Domestic Product. It can be defined as the total
monetary value of all goods and services produced within an economy during a
given period of times usually one year.
1.10 ORGANIZATION OF THE STUDY
Chapter one is the introductory
parts. Chapter two will be the literature review. Chapter three is theoretical
framework. Chapter four is research methodology, data analysis and
interpretation of results. While chapter five shall contain the summary,
conclusion and recommendation.