This study looked at how commercial banks financed agriculture in Nigeria. Based on a straightforward random sample technique, respondents were chosen. A sample of one hundred (100) employees of First Bank Nigeria Plc. was taken.

Chi-Square analysis was used to develop and test three hypotheses. All null hypotheses were rejected as a result of the study, which led to the acceptance of the alternative hypotheses.

Conclusions were drawn based on the results of the tested hypotheses, and the outcome of hypothesis one, where the alternate hypothesis was accepted and the null hypothesis was rejected, shows that there is a strong association between the type of borrower and their repayment patterns.

As a result of hypothesis two, the alternate hypothesis was accepted, the null hypothesis was rejected, and it was determined that there is a strong association between farmer education and loan payback.

The third hypothesis likewise showed that there is a strong correlation between the categories of pledged security and loan repayment trends.

A conclusion was reached, and advice was given to farmers, the government, and commercial banks.




Nigeria, like many other African nations, relies heavily on agriculture due to its plentiful water and land resources. Although the oil industry has expanded quickly over the years, agriculture still accounts for 40% of GDP and employs about 60% of Nigeria’s 150 million people, both formally and informally. Nigeria’s agriculture is still primarily subsistence-based, with rural farmers producing 80% of the country’s food on less than a dollar per day from less than one hectare of land (2.47 acres). Nigeria’s varied agro-ecological characteristics are capable of supporting a range of farming models to bring about its own green revolution.Nevertheless, throughout time, a number of administrations neglected agriculture and did little to wean the country off its disproportionate reliance on the capital-intensive oil industry. Before the discovery of oil in the 1970s, Nigeria was a significant net exporter of agricultural goods and this industry was the main source of foreign exchange earnings. Nigeria was a significant net importer of agricultural goods in 2010, with total imports topping $3 billion. If appropriate attention is paid to agricultural growth policies, financing, and the supply of rural infrastructure, the nation has a chance to regain its prior position.The majority of smallholder farmers do not have the financial resources to buy the supplies they need to boost their output, raise their incomes, and get out of poverty. To acquire seeds, fertilizer, herbicides, mechanized equipment, or to rent it, as well as for connected services, farmers need credit.

The much-desired green revolution can be achieved thanks in large part to farm finance, according to Nigerian agricultural policy. The establishment of sustainable agricultural financing schemes, programs, and organizations that might offer micro and macro loan facilities for small, medium, and large-scale producers, processors, and marketers is one of the policy’s main objectives. The foundation of finance for the sector, public spending on agriculture, has, however, persistently fallen short of recommendations. Therefore, it should not come as a surprise that these policies have not succeeded in achieving the intended objectives of food self-sufficiency, independence, poverty reduction, and rural development.Importantly, Nigerian agriculture receives egregiously inadequate funding. Early in 2011, the Central Bank of Nigeria (CBN) Governor was cited as saying, “Agriculture currently contributes for 40% of the GDP, however it receives only 1% of total commercial bank loans.” This is considerably lower than the average for other developing nations, such as Kenya and Brazil, where the rates are supposedly 6 and 18 percent, respectively.

In 2008, the International Food Policy Research Institute (IFPRI) and the World Bank conducted the Nigeria Agriculture Public Expenditure Review, which found that from 2001 to 2005, less than 2% of federal spending went toward public support for agriculture. The Comprehensive Africa Agricultural Development Program’s 10% target, set by African leaders, is substantially below this amount (CAADP). The AU parliament created the CAADP in 2003 with the goal of enhancing food security, nutrition, and earnings in Africa’s predominantly agrarian economies. In order to do this, it seeks to increase agricultural productivity by at least 6% annually and public investment in agriculture to 10% of annual national budgetsFor activities deemed essential for fostering agricultural growth, such as basic and applied agricultural research, agricultural extension and capacity building, agricultural loans and irrigation expansion, very little funding is available. Despite this inadequate investment, between 2001 and 2009, agriculture contributed an average of 42% and 32%, respectively, to the nation’s overall GDP. Experts believe that extra annual investments of up to $8 billion are needed in Nigerian agriculture for the agricultural sector to successfully transition

Nigeria’s agricultural development is hampered by the majority of smallholder farmers’ lack of access to loans. Successive governments’ attempts to solve the issue have mainly failed. The nation’s commercial banks believe agricultural finance to be high-risk. The Nigerian Central Bank is working to reduce the sector’s risk and encourage banks to lend to farmers.

This study aims to evaluate the contributions of commercial banks to Nigerian agriculture funding, with a focus on First Bank Nigeria Plc. We’ll also look at the role played by the Central Bank of Nigeria (CBN) and a few other commercial banks.

statement of the problem

In the early 1970s, as the price of oil rose, it is significant to highlight that the agricultural sector suffered significantly from neglect as the nation’s economic activity and government money migrated to the industry. As a result, the price decreased on the global market.

The cost of food imports into Nigeria reached a previously unheard-of level of roughly N1.5 billion, while traditional agricultural exports were steadily dropping. The need to fundamentally restructure the economy in order to achieve self-sustaining growth and development then arose, as well as the necessity to reengineer the agriculture sector.In order to solve the issue of agriculture by providing loans and advances to the agricultural sector after the country became independence, the CBN formed several agricultural agencies, such as the Credit Guarantee Loan Scheme (1972), however this plan was not properly carried out. “Operation Feed the Nation” was an agricultural reform program that was created in 1971. Poor program evaluation and execution could prevent the government from achieving its goals. The government introduced the Structural Adjustment Initiative in 1989, but the program had ulterior motives as well.Self-deluded bourgeois ideologues rejoiced in the success of the CBN’s 2005 bank reform, which saw banks expand and open new branches all over the main cities. The banks were declared to be in good health and ready to provide financing for the crucial area of the economy. The banks invested in oil, whose price has since fallen on the global market, rather than investing in the actual economy, such as agriculture, manufacturing, iron and steel, etc. that will increase economic productivity. Additionally, they made enormous investments in the casino market, where they made foolish bets in hopes of making quick profits, but the stock market has since crashed, and they are now in deep trouble the banks have lost over 900 billion naira invested in shares.Farmers First, a lending program now offered by First Bank Plc, debuted in 2008. In order to be eligible for a loan under this program, which is ostensibly open to all types of farmers, individuals or groups of farmers must first meet the conditions listed below: they must have owned their farm for some time; they must have an open current account for at least six months; they must deposit 25% of the total amount they plan to borrow; they must have a six-month moratorium; they must have agriculture insurance; and they must pay other miscellaneous fees. The minimum loan amount under this program is N Despite these obstacles, a lot of impoverished farmers who have overcome them are nevertheless denied loans on spurious justifications, reasons for the wealthier farmers.

Nigeria’s agricultural development is hampered by the majority of smallholder farmers’ lack of access to loans. Commercial banks in the nation view agricultural funding as high-risk, making it challenging to provide loans to a majority of farmers.

The researcher often looks at how commercial banks are affected by these issues and makes recommendations and proposals to help lessen them.


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 Nigeria as the relate to Agricultural development.
  • 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.


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 Nigeria?
  • 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 Nigeria as they relate to agricultural development?
  • What factors are responsible for only few individuals and small scale agriculture industries benefiting from such policies?


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.

Hypothesis 2:

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.

Hypothesis 3:

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.


The research would focus on the activities of First Bank Nigeria Plc., towards the financing and development of agriculture in Nigeria. Emphasis would be on operational schemes of the bank, condition and pre-requisites for borrowing, financing procedures, sources and application of funds, evaluation financing. The study would cover a definite period to enable us have a clear vision of the role of First Bank Nigeria Plc. in relation to agricultural credit in Nigeria.


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.

Leave a Comment