THE ROLE OF FINANCIAL INSTITUTIONS IN AGRICULTURAL DEVELOPMENT (1990-2010) (A CASE STUDY OF NIGERIA AGRICULTURAL COOPERATIVE AND RURAL DEVELOPMENT BANK)

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

Nigeria is endowed with natural resources, large fertile farmland, wide range of crops, and river amongst others. Despite its abundant nature resources it is faced worth a poor food situation. The poor food situation is traceable to the decline in the agricultural sector. The problem of feeding and provision of natural resources is increasing by the day. However, several efforts are being made to improve the standard.

Prior to the discovery of petroleum in Nigeria agriculture used to be the highest foreign exchange resources earner and its contribution to gross domestic product GDP has been estimated to about 62.63% in 1960, 48.08% in 1970, and 20.63% in 1980. Recently due to the growing awareness of the role of agriculture, the various governments have intensified efforts aimed at transforming from its present subsistence level to a market oriented production. One of those efforts was the ban made on importation of agricultural products like palm oil, maize and rice. This was done to encourage improvements on our production standard.

Due to the fall in the level of production from decade to decade, the country could no longer feed the large population, provide raw material for domestic industries, engage in export of agricultural produce and employ the labor force of the country despite the abundance of human and material resources.

In spite of growing urbanization, Nigeria is known to be predominantly rural in nature and majority of the population is dependent directly or indirectly on agriculture for their livelihood. Though, the Nigerian agriculture is characterized by low farm income, low level capacity to satisfy the fond needs of the country, due to the outdated and primitive techniques of production, it is still the mainstay of the nation’s economy.

Measures and program setup to upgrade the Agricultural sector involve the construction and reformation of the whole structure of the agricultural sector by the creation of appropriate institutions and public services. This would help strengthen the economic position of the dependent farmers. Examples of such measures are National Accelerated Food Production Project (NAFPP), Structural Adjustment Program (SAP), Nigeria Agricultural Cooperation and Rural Development Bank (NACRDB).

STATEMENT OF RESEARCH PROBLEM.

According to Anyanwu Etal (1997:14) ‘’the agricultural sector has been recognized for a long time as an important sector to Nigerian economy and development is one of the crucial requirements for the overall economic growth. He noted further that the decline in agricultural activities might appear natural in any development process; it is obvious that in Nigeria agricultural activities would remain the most important single sector for some time to come. He emphasized that in the past, development planners have introduce programs such as national accelerated food production project (NAFPP), green revolution programs (GRP), in search for all appropriate technique in order to increase farm output an d productivity and such program have at one time been implemented.

In recognition of the aforementioned that attempt is made in this study to provide answers or solution to the research problems below.

1. What are the reasons for continuous fall or decline in the production level of the agricultural sectors of the Nigerian economy?
2. What actions can be taken to upgrade the current production level of the agricultural sector?
3. What effect does the decline in agricultural sector have on the human resources of the economy?

What measures have been taken in the past to redress the perceived slow growth rate of the agricultural sector?

How and to what extent does the performance and commitment exhibited by financial institution in general, Nigeria agricultural cooperation and rural development bank (NACRDB) in particular in terms of providing financial support influenced the activities of agricultural sector?