CHAPTER ONE
1.0.
INTRODUCTION
Since
the discovery of crude oil in Nigeria, farming activities has had its fare
share of inconsistencies and relegation. Agriculture is a very
important sector of Nigeria’s economy. Its role in economic development cannot
be over emphasized; umar 2004 opined that between 1960-1976 alone, agriculture
accounted for 40 to 60 percent of the national income and about 50 to 80
percent of the labour force is engaged in agricultural production. Agriculture
has some major roles to play in Nigeria’s economic development. These are, to
increase the supply of food for domestic consumption and export and to create
more jobs.
Despite the crucial
roles of agriculture in the country’s economy, agriculture has had its fair
share of problems which has led to the decline and poor performance in
agricultural sector. The cardinal problem is the lack of adequate funding.
Agricultural activities in Nigeria have
undergone a constant decline this is as a result of more financing by
government and other corporate organizations like commercial banks. Efforts
have been made by previous governments in Nigeria to resuscitate agriculture
activities in Nigeria by making provisions for loans so that agriculturists a
vast majority of them being average Nigerians can have access to these loans to
improve their production base and employ labour. Agricultural financing in
Nigeria has proven to be fairly successful when it comes to getting these funds
to the actual rural farmers who are in dare need of this assistance. The effect
of adequate agricultural loan on agricultural activities cannot be over
emphasized. For agricultural loan system to be effective again a lot of things
have to be gotten right. Agricultural loan is considered as a catalyst that
activates other factors of production and makes under-used capacities
functional for increased production (Ijere, 1998). Thus agricultural loan plays an important role in
agricultural and rural development as it enables farmers reap economies of
scale, venture into new fields of production, employ new technologies and
empower them to provide utilities for a widening market.
1.1
Statement
of general problem
In
a developing country like Nigeria, they’ve not been a defined way of properly
financing agricultural activities; this is because most of these farmers are
rural dwellers. Another problem is the challenges faced by these farmers in
accessing these loans from government since most of them are peasant. A Major
problem leading us to this research is to know the percentage of success
recorded in assistance of farmers especially those ones in the villages with
loans. An equally major problem is to know if increased agricultural loan
assistance would actually end unemployment and increase productivity.
1.2. 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.
To
know the difficulties encountered by those farmers in assessing these loans
To
know which institutions have been really supportive in assisting the farmers to
increase productivity.
To
know if increased assistance would mean increase in employment and
productivity.
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.
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.
1.3. 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.
1.4. 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 the Nigerian government, its citizens, farmers and
agricultural organizations that may be interested in this work.
1.5. 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.
1.6. 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)
HYPOTHESIS 3
H0:
There is no
significant relationship between agricultural loan system and farming
activities in Nigeria.
H1: There is significant relationship between agricultural
loan system and farming activities 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).