CHAPTER ONE
- 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.
- 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).