- EVALUATION OF CONTRIBUTION OF COMMERCIAL BANK TO THE ECONOMIC DEVELOPMENT OF NIGEIRA (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
- AN ASSESSMENT OF THE IMPACT OF BANK CREDIT ON AGRICULTURAL DEVELOPMENT (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
- THE IMPACT OF PERFORMANCE EVALUATION THROUGH THE ANALYSIS OF FINANCIAL STATEMENT ON INVESTMENT DECISIONS (A CASE STUDY OF LOGMAN NIGERIA PLC.)
- ASSESSMENT OF CONTRIBUTION OF COMMERCIAL BANK TO THE ECONOMIC DEVELOPMENT OF NIGEIRA (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
- ASSESSMENT OF THE IMPACT OF BANK CREDIT ON AGRICULTURAL DEVELOPMENT (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
- EFFECTS OF SMALL BUSINESS ENTERPRISES ON EMPLOYMENT GENERATION IN NIGERIA (A Case of Isimeme and Sons Nigeria Limited)
- THE IMPACT OF BANK FRAUD AND DISTRESS ON BANKING HABIT IN NIGERIA (A CASE STUDY OF FIRST BANK, GTB, UBA, UNION BANK AND ZENITH BANK)
- THE IMPACT OF ELECTRONIC BANKING ON THE PERFORMANCE OF BANKING IN NIGERIA (A Case Study of Eco Bank Plc)
- THE ROLE OF COMMERCIAL BANKS TO THE DEVELOPMENT OF SMALL SCALE INDUSTRIES IN NIGERIA
- THE IMPACT OF CREDIT RISK MANAGEMENT IN COMMERCIAL BANKS (A CASE STUDY OF UBA PLC)
IMPACT OF COMMERCIAL BANKS IN AGRICULTURAL FINANCING IN NIGERIA (A Case Study of First Bank Nigeria Plc.)
This research examined the effects of commercial banks in agricultural financing in
Three hypotheses were formulated and tested with the use of Chi-Square analysis. The analysis resulted to rejecting all null hypotheses and hence accepting the alternate hypotheses.
Based on decisions of the tested hypotheses conclusions were reached there is significant relationship between the type of borrower and their repayment patterns, evident from the result of hypothesis one where the null hypothesis was rejected and the alternate hypothesis accepted.
The result of hypothesis Two also resulted to rejecting the null hypothesis and accepting the alternate hypothesis and concluding that there is significant relationship between the educations of farmers and loan repayment.
It was also revealed from hypothesis three that there is significant relationship between the types of security pledged and loan repayment patterns.
Conclusion was drawn and recommendations were proffered to commercial banks, government and farmers.
TABLE OF CONTENTS
Cover Page i
Table of Contents vi
CHAPTER ONE: Introduction
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 5
1.4 Research Questions 6
1.5 Research Hypotheses 7
1.6 Scope of the Study 8
1.7 Limitation of the Study 8
1.8 Historical Background of the Case Study 9
1.9 Definition of Terms 12
CHAPTER TWO: Literature Review
2.1 Introduction 14
2.3 Credit and its Role Agriculture 22
2.4 Sources of Agricultural Credit 24
2.5 Agricultural Finance 25
2.6 The Role of Financial Institution in Agricultural Financing 26
2.7 Agricultural Credit Schemes 30
2.8 Terms of Agricultural Credit Repayment 32
2.9 Rural Banking and Agricultural Extension 39
2.10 First Bank Agricultural Scheme 43
2.11 First Bank Nigeria Plc Finance Operation and Evaluation 47
2.12 Problems of Agricultural Credit Repayment in
2.13 Problems of Agriculture 54
CHAPTER THREE: Research Methodology
3.0 Introduction 58
3.1 Re-Statement of Research Question 58
3.2 Restatement of Research Hypotheses 59
3.3 Research Design 60
3.4 Population of the Study 61
3.5 Sample Size and Sampling Techniques 61
3.6 Data Collection Instrument 61
3.7 Method of Data Analysis 62
3.8 Reliability of the Research Instrument 63
3.9 Validity of the Research Instrument 63
3.10 Research Limitations 63
CHAPTER FOUR: Data Presentation and Analysis
4.1 Introduction 64
4.2 Personal Characteristics of the Respondent 64
4.3 Response of Respondents to the Problem Areas 68
4.4 Testing and Interpretation of the Hypotheses 75
4.4.1 Analysis of Hypothesis One 75
4.4.2 Analysis of Hypothesis Two 77
4.4.3 Analysis of Hypothesis Three 79
4.5 Discussion of Result 81
CHAPTER FIVE: Summary, Conclusion and Recommendation
5.1 Introduction 84
5.2 Summary of Findings 84
5.3 Conclusion 84
5.4 Recommendations 85
5.4.1 Recommendation for the Government 85
5.4.2 Policy Recommendation for the Bank 86
5.4.3 Policy Recommendation for Farmers 88
5.5 Suggestions for Further Studies 90
1.1 BACKGROUND OF THE STUDY
Like many other African countries,
However, successive administrations neglected agriculture over the years and failed to diversify the economy away from overdependence on the capital-intensive oil sector.
The fact of the matter is most of the smallholder farmers lack access to capital to acquire the needed inputs to increase their productivity and incomes and reduce their poverty. Farmers require credit to purchase seeds, fertilizers, herbicides, and buy or rent mechanized equipment and related services.
Nigerian agricultural policy recognizes the vital role of agriculture finance in attaining the much desired green revolution. A major focus of the policy is to establish a system of sustainable agricultural financing schemes, programs and institutions that could provide micro and macro credit facilities for the small, medium and large-scale producers, processors and marketers. However, public expenditure on agriculture which serves as the bedrock of financing for the sector has consistently fallen short of recommendations. It is therefore not surprising that these policies have failed to achieve the set goals of food self-sufficiency, self reliance, poverty reduction and rural development. Importantly,
The Nigeria Agriculture Public Expenditure Review, a collaborative study carried out by the International Food Policy Research Institute (IFPRI) and the World Bank in 2008, revealed that public spending on agriculture was less than 2 percent of federal expenditure during 2001 to 2005. This is far below the 10% goal set by African leaders under the Comprehensive Africa Agricultural Development Program (CAADP). CAADP was established by the AU assembly in 2003 with a focus on improving food security, nutrition, and increasing incomes in
This research work tends to asses the effects of commercial banks in financing agriculture in
1.2 STATEMENT OF THE PROBLEMS
It is important to note that in the early 70s when the oil price increased, the agricultural sector suffered a serious neglect as the focus and concern of the nation’s economic activities and government revenue shifted to the industry. Consequently, price fell in the world market.
The Nigerian food import bill assumed an unprecedented level of about N1.5billion while the traditional agricultural exports were progressively declining. The need then arose for re-engineering the agricultural sector and a fundamental restructuring of the economy towards self-sustaining growth and development. After the post independent, the CBN established some agricultural agency like Credit Guarantee Loan Scheme (1972) to address the problem of agriculture by granting loan and advances to agricultural sector, but this scheme was not properly implemented. In 1971, an agricultural reform was established called “Operation Feed the Nation”. Poor assessment and implementation of the programme could not allow the government to achieve its objectives. 1989, the government came up with a reform called Structural Adjustment Programme, the programme was also with a wrong motive.
The Bank reform (2005) by CBN resulted in the growth of the banks with new branches springing up everywhere across the major cities, and was celebrated by self-deluded bourgeois ideologues. The banks were given a clean bill of health, and they were said to be poised to finance the critical sector of the economy. Rather than invest in the real sector of the economy like agriculture, manufacturing, iron and steel, etc that will bring about improved productivity in the economy, the banks went into the oil whose price has now crashed at the international market. In addition, they also invested colossal sums of money in the casino market, where they speculated wrongly in anticipation for quick returns, but the stock market has now crashed, and the banks have lost over 900 billion naira invested in shares.
First Bank Plc currently has a loan scheme called Farmers First, which started in 2008. Under this scheme purportedly meant for all categories of farmers, the individuals or group of farmers who want to access the loan (N1million minimum) are expected to meet the following requirements before they are eligible: own an existing farm for some time; open and run current account for a period of six months; deposit 25 per cent of the total sums intended to borrow; six months moratoria; agriculture insurance; and other sundry charges. These hurdles notwithstanding, many poor farmers who have scaled it are still denied the loans on flimsy excuses, grounds for the rich farmers.
The researcher tends to examine the impact of commercial banks to these problems and proffer suggestions and recommendation that could limit these challenges.
1.3 OBJECTIVES OF THE STUDY
The broad objectives of this research work is to examine varying the impact of bank credit on agricultural development. Other specific objectives include;
· To examine the effect of CBN Credit guidelines and other financial bodies on Agricultural development.
· To examine the relationship of bank lending policies in
· To examine how effective or defective are these credit policies on the preferred Sector of an economy.
· To examine factors that are responsible for only few individuals and small-scale agriculture industries benefiting from such polices.
· To proffer recommendation on Assessment of the Impact of Bank Credit on Agricultural Development.
1.4 RESEARCH QUESTIONS
Research questions are those interrogative statements that arise often from the course of study or alternatively they can be defined as research objectives stated in interrogative form. Research questions are meant to generate possible answers to different aspects of the research problem and they should be clearly stated such that they act as guides in identification, collection and analysis of relevant data. In order to achieve the purpose of this research study, the study will attempt to provide answers to the following research questions in order to arrive at a logical conclusion
· Does any relationship exist between the CBN credit guidelines on agriculture and agricultural development in
· Is there any significant difference between the loan repayment of small and large-scale farmers?
· Is there any Relationship between the type of borrower and loan repayment?
· Is there any significant relationship between gender and loan repayment patters of farmers?
· Is there any significant relationship between the types of security pledges and repayment patterns?
· Is there any significant relationship between the educations of farmers’ and loan repayment?
· What are the banks lending policies in
· What factors are responsible for only few individuals and small scale agriculture industries benefiting from such policies?
1.5 RESEARCH HYPOTHESES
Hypothesis is a tentative answer to a research question. It is a conjectural statement about the relationships that exist between two or more variables which needs to be tested empirically before they can be accepted or rejected. In a research work, hypotheses are never proved or disproved, they are either supported (i.e. accepted) or rejected. To provide answer to the research questions arising from this study, the following hypotheses are postulated.
Ho: There is no significant relationship between the type of borrower and there repayment patterns.
Hi: There is significant relationship between the type of borrower and their repayment patterns.
Ho: There is no significant relationship between the educations of farmers and loan repayment.
Hi: There is significant relationship between the educations of farmers and loan repayment.
Ho: There is no significant relationship between the types of security pledges and loan repayment patterns.
Hi: There is significant relationship between the types of security pledges and loan repayment patterns.
1.6 SCOPE OF THE STUDY
The research would focus on the activities of First Bank Nigeria Plc., towards the financing and development of agriculture in
1.7 LIMITATION OF THE STUDY
In the course of conducting this research work it is expected that the following will constitute impediments to the effective conduct of the study
a) Time constraint within which the study must be completed.
b) Financial constraint
c) Inaccessible and inadequate data
Nevertheless, I believe the above limitations will in no way affect the reliability and validity of the research study.
1.8 HISTORICAL BACKGROUND OF THE CASE STUDY
First Bank of Nigeria Plc remains one of
Consequently, it has remained the most profitable banking franchise in
With over 400 business locations, the bank has one of the largest domestic sales networks in
The Bank has nine local subsidiaries and a full-fledged subsidiary in the
In the last decade, by playing key roles in the Federal Government’s privatization and commercialization scheme, First Bank has led the financing of private investment in infrastructure development in the Nigerian economy.
A key element of the Bank’s strategy is its continued focus on retail banking/consumer financing, gradually shifting towards a high yield diversified portfolio by aggressively targeting the relatively under-banked consumer spending, which is a major driver of domestic demand in developed economies, still constitutes a relatively lower percentage of GDP in
Of particular note is the fact that Regional Directorate whose purview encompass retail and commercial banking, leverage the Bank’s domestic sales network of over 400 branches, acting as points of sale for all the Bank’s products/services to customers in selected target markets and facilitating the Bank’s ability to effectively dominate the market.
First Bank got listed on the Nigerian Stock Exchange (NSE) in March 1971 and has won the NSE’s Annual President’s Merit Award for the best financial report in the banking industry twelve times.
In further evidence of the Bank’s strength, is Standard and Poor’s, an international ratting of “BB - ” “B” short term rating with stable outlook. This is the same rating assigned the country by the same agency. Fitch, another international agency, assigned the Bank “B+” (long-term) and “B” (short-term) and stable outlook, which translates into a notch below what the agency, assigned the country. The agency also affirmed the Bank’s “A+” and F1 (nga) national long-term and short-term rating respectively for the past five years. Global Credit Company Limited, a licensed rating agency, Alos assigned the bank national long and short term ratings of “AA” and “A+” respectively. Both agencies accorded the Bank the highest rating in the national short-term category, while Austo & Co. (a national credit rating agency) upgraded its long-term outlook on the Bank from an “A” rating in the 2001/2002 financial year to “Aa” in the last four years.
The ratings are a manifestation of the strength of the Bank’s domestic franchise and systemic importance in the industry in particular and the economy in general. The international ratings by Standard and Poor’s and Fitch are particularly significant as they indicate the alignment of the Bank’s practices with world-class standards, expected to facilitate seamless integration into the international financial markets.
First Bank was equally rated number one among Nigerian banks in Corporate Governance practice in 2003 and 2005 by Johnston Irving Consulting, in collaboration with ICRA Pty Limited (an associate of Moody’s Investors,
In line with the Bank’s vision “to be the clear leader and Nigeria’s bank of first choice”, its mission “to remain true to our name by providing the best financial services possible”; and its brand essence, “dependably dynamic”, the Bank has continued to transform itself as it forges ahead in its second century of providing qualitative banking services to the nation and maintain leadership in a consolidated and more dynamic industry.
1.9 DEFINITION OF TERMS
CREDIT OR LOAN: Used interchangeably. It refers to the cash or goods or services granted by the financial institution (e.g. bank) to a beneficiary (borrower) to use in the present with a pledge to pay back at a future date.
LOAN REPAYMENT: This is the fulfillment of a loan obligation
COLLATERAL SECURITY: Is an asset pledge against the performance of a loan.
LOAN DISBURSEMENT LAG: Gives an indication to the timeliness of a loan delivery. This is measured by the number of days between application and disbursement.
LOAN DELINQUENCY: Loan default or non-performing loan means the same. It is a failure to fulfill loan obligation. A loan becomes defaulted if the interests is ninety days over due and not enhance or extended.
SOCIO ECONOMIC STATION: Is determined by the farmers’ asset structure which defines his/her standard of living. The assets include: Type of House, Radio, Wrist Watch, Motor Cycle, Bicycle, Car, Television, Farm Produce Processor.