Agricultural Finance and Economic Growth In Nigeria

Abstract

 This study examined how agricultural finance affects Nigeria's economic growth from 1986 to 2024. The analysis utilised the Agricultural Credit Guarantee Scheme Fund, loans from banks to farmers, government expenditure on agriculture and real gross domestic product as indicators of agricultural funding. Time-series data for this analysis were obtained from the statistics bulletin of the Central Bank of Nigeria. Various data analysis techniques were applied, including the Ordinary Least Squares (OLS) regression method, the Error Correction Model, the Johansen Cointegration test and the Augmented Dickey Fuller unit root test. The OLS estimate revealed that there is a significant relationship between agricultural bank loans and Nigeria's real GDP, specifically, the study shows that a 1% increase in BLN, GEX and ACS will result to 0.9, 0.6 and 0.1 expansion in GDP in Nigeria. Additionally, there is a strong correlation between the Real Gross Domestic Product (GDP) and the level of government spending on agriculture. A meaningful and important relationship was found between Nigeria's Real Gross Domestic Product and the Agricultural Credit Guarantee Scheme Fund. The findings of this research indicate that investments from the Agricultural Credit Guarantee Scheme Fund, government funding for agriculture and bank lending have significantly contributed to Nigeria's economic development. Among other recommendations, it has been proposed that increasing the volume and size of agricultural loans by lowering interest rates will enhance economic growth in the country.