Influence of Agricultural Credit on the Nigerian Crop Subsector

Mosinmileoluwa AFOLABI, Ochei Ailemen IKPEFAN and Godswill Osagie OSUMA

Abstract:

The research study focused on examining the influence of agrarian credit on the Nigerian crop subsector for the year 1981-2018 (38 years). The study established one (1) broad objective and four (4) specific objectives.  From the unit root tests conducted, it was revealed that both the explained and explanatory variables were all integrated at the order of 1{I(1)}. Hence, the Johansen cointegration technique, error correction model (ECM) and the FMOLS were adopted in this research work.  From the research results it was established, In the short run, that LACGSF is statistically significant and there exists an inverse relationship with log of crop subsector’s agrarian domestic product (LCAGP), LDMBCA is not statistically significant and has an inverse relation with LCAGDP.  LINT is statistically significant and there exists an inverse relation with LCAGDP, RVAT is statistically significant, and there exists a direct relationship with LCAGDP and NEXR is statistically substantial and has an inverse relation with LCAGDP. While in the long run, LACGSF is of statistical significance and has a direct relation with LCAGDP, LDMBCA is significant and has a direct influence on LCAGDP, LINT is not significant and has a direct relationship with LCAGDP, RVAT is significant and has an inverse influence on LCAGDP while NEXR is statistically significant and it has a direct relation with LCAGDP. Therefore, it is recommended the Federal Government of Nigeria in collaboration with the CBN should make ensure that such credit schemes should be easily accessible to both small- scale farmers, large-scale farmers and agricultural investors by establishing panel investigating committee that will ensure that the funds are properly and adequately disbursed without the presence of policy inconsistencies. The study further suggested that FGN should evolve on structuring policies towards tax reforms for agrarian development, make sure generated tax revenue must be sufficient, efficiently, judiciously incorporated and utilized into developing the crop subsector and the agrarian sector as a whole.