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THE IMPACT OF
DEVELOPMENT BANKS ON THE NIGERIAN AGRICULTURAL SECTOR
A CASE STUDY
OF NACRDB.
ABSTRACT
The present
food crisis in Nigeria is a multi-facial one, which led to the writing of this
project. The key aim of this study was to find out the extent to which the
Nigeria agricultural Co-operative rural and development bank had influenced the
output of the nation’s agricultural sector and examine the operations of the
banks. In course of this study, we found out that the bank has not had much
impact on the nation’s agricultural sector. We recommend that government should
channel more funds to the bank and to restructure the conditions for giving
loans, so that the small scale farmers can have access to more loans/credits
TABLE OF CONTENTS
Certification i
Dedication ii
Acknowledgment iii
Abstract iv
Table of Contents v
CHAPTER
ONE: INTRODUCTION
1.1 Background
of the study 1
1.2 Statement
of problem 2
1.3 Objective
of the study 5
1.4 Method
of study 5
1.5 Hypothesis 7
1.6 Significant
of study 7
1.7 Scope
and limitations of study 8
1.8 Organization
of the study 8
CHAPTER TWO: LITERATURE REVIEW AND THEORETICAL
BACKGROUND
2.1 Definition
of key concepts 10
2.2 Approaches
of development 11
2.3 Development
banking in Nigeria 18
2.4 Focus on the Nigeria agricultural
co-operative and rural development bank 20
2.5 Source of funds 24
2.6 Operation of the NACRDB 25
2.7 Lending performance of the NCRDB 29
CHAPTER THREE: METHOD OF STUDY
3.1 Research process 30
3.2 Sampling process 31
3.3 Questionnaire design 31
3.4 Data collection 32
3.5 Data analysis techniques 33
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Activities of NCRDB in the study area 34
4.1.1 on lending
scheme 34
4.1.2 Direct small
holder scheme (SHS) 35
4.1.3 Special small
holder loan scheme 35
4.1.4 Second livestock
development project (SLDP) 36
4.1.5 Direct investment
loan scheme (DILS) 36
4.1.6 Marketing loan scheme 37
4.1.7 Workers scheme 37
4.1.8 NCRDB rural women credit scheme 37
4.2 Advances and loans/credits to farmers 38
4.3 Promotion of agricultural development by
NACRDB 43
4.4 Beneficiaries of NCRDB advances/loans 44
4.5 Challenges/problems faced by NACRDB
government response (source) 45
CHAPTER FIVE
5.1 Summary 49
5.2 Conclusion 50
5.3 Recommendations 52
5.3.1 Recommendation for policy 52
5.3.2. Recommendations
for further studies 54
Bibliography 55
Appendix I 56
Appendix II 57
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Development is an all-embracing
process. It implies the ability of the society to determine and regulate its
internal and external relations. Development is an essential process for nay
country that is not satisfied with its present status. Many aspects exist on
this issue of development i.e political, social economics, technological etc.
In this work we more concerned with
the economic development. Development economics can be defined as “the process
whereby the real per capital income of a country increase over a long period of
time subject to the stipulations that the number of the absolute poverty lines
does not become more unequal”, (Meier, 1984).
Also it can be defined as the process
of improving the economy’s ability to satisfy the wants and needs of the
people. (Amos Web Economic dictionary).
Different scholars Dudley seers 1969,
Akin Mobogunje (1980), Akakpan, (1987), Mac (1981) have viewed development
variously, such views include, viewed it as a process of economic growth, as an
objective, modernization process, distributive justice, socio-economic
transformation integrated rural development, coca, robber, cotton and
groundnut.
Whichever way one decides to look at development
the approaches includes, export commodities etc.
Nigeria, being a less developed
country, but with a burning desire to develop, set up some development banks.
Which include Nigeria industrial development banks (NIDB).
1. Nigeria
bank for commerce and industry (NBCI)
2. Federal
mortgage bank of Nigeria (FMBN)
3. Nigeria
agricultural and cooperative bank (NACB) presently called rural development
bank (NACRDB). Or focus in this study is on the Nigeria agricultural
co-operative and rural development banks (NACRDB).
1.2 STATEMENT OF PROBLEM
The agricultural sector is important
for its major contribution to any economy. The development of an economy is
partly dependent on increasing the productivity of the agricultural sector
through the provision of food stuff for the growing people (population), raw
materials for the industries and the exportation of primary products for
foreign exchange etc.
The sector played these roles every
well before the discovery of oil in the 1960s which dramatically shifted the
government’s attention away from agriculture. The result was agriculture
decline wer are now witnessing with the oil bopin the 70’s tis made the
agricultural sector less altercative. This led to the export of crude oil sen
as an easier way of earning foreign exchange.
It is important for us to note that
between 1960 and 1970 the agricultural sector accounted for over 60 percent of
the country’s gross national product (GNP), recording 63.4 contributions had
dropped to 23.4 percent.
“the decrease in the contribution of
the agricultural sector could e traded to factors which include; misplaced
government priorities predominance of primitive farming systems and in adequate
supply of credit to the sector (Sule, 1986).
Lack of credit availability seems to
be the most vital of all the impediments, this is because for an economy to
meet the aggregated demand for agricultural product for both food stuff and raw
materials for industries, the sector will require modern facilities and these
machines require large amount of capital.
Agricultural credit may be said to be
funds borrowed by individual farm business and marketing corps and livestock
products (Halerow, 1959).
The federal government having known
that for the agricultural sector to function properly, large amount of capital
would be needed. This was the reason why the federal government established the
Nigerian agricultural co-operative and rural development bank (NACRDB), for the
purpose of granting credit to players in the sector. Since the establishment of
(NACB) presently called (NCRDB) in 1973 with the sole aim of improving the
level and quality of all aspect of agricultural production.
The major question now is what impact
has this bank had on the agricultural sector in Nigeria since its inception.
1.3 OBJECTIVES OF THE STUDY
The objectives of the study are as
follows:
1. An
examination of the activities of the Nigeria agricultural co-operative and
rural development banks in the country.
2. An
analysis of the procedures of granting advances, loans or credit to farmers.
3. an
ascertainment of how useful the institution have been in promoting agricultural
development.
4. A
determination of the categories of the banks beneficiaries of its advances i.e.
whether small, medium, or large scale farmers.
5. An
evaluation of the operation challenges/problems of the NACRDB.
1.4 METHOD OF STUDY
Questionnaire
on the subject was administered to randomly selected famers that cover some
selected areas of the state. Most of the question drawn of are open ended as
they concerned perceptions, preference, sex, age, level of education, sources
of funds, the number of attempts made to obtaining loan from the banks etc.
In
addition, group discussion in Oyibo local government area of rivers state was
conducted in some of localities visited to have a first-hand knowledge of the
issues under study.
Also,
the NACRDB branch in the state was requested to respond to questions concerning
the number of customers that avail themselves the services of the bank, the
criteria for disbursement of loans, the number of the loan defaulters. If any,
whether or not farmers use such loans for the intended agricultural purpose,
the nature of problems of any, faced in performing their role etc.
We
also make use of the library faculties going launch magazines, newspapers and
other useful documents journals and other scholastic publications.
1.5 HYPOTHESIS
H01:
in this study we hypothesized that NACRDB activities have led to an increase in
the output of the Nigeria agricultural sector.
H02:
the establishment of the NACRDB has not led to an increase in the output of the
Nigerian agricultural sector.
1.6 SIGNIFICANCE OF STUDY
The
study has immense benefits for:
1. The
Nigerian farmers how can now know the type of financial services being offered
by NACRDB and possibly to take advantage of it.
2. The
NACRDB institution to develop targets to reaching the people it desires.
3. The
NACRDB institution to develop more schemes to enable NACRDB to re-appraise its
role to improve on its services in the most desired direction.
4. The
Nigeria populace at large as there will be the solution of the problem of low
agricultural productivity through the acquisition of better or improved farming
technologies and techniques in showed by improved credit facilities ultimate or
overall being the generation at the increased agricultural productivity and
additional employment for the people and above all enable Nigeria achieve a
strong economic base.
1.7 SCOPE AND LIMITATIONS OF STUDY
In
order to assist the impact of NACRDB on the Nigerian agricultural sector, we
hope to visit the headquarters of NACRDB in Kaduna, the branch office in the
state and also interview some of their officials.
Due
to the time and monetary constraints we will not be able to cover all farm
sites and also will limit my assessment to limited farm sites. We will also
interview some beneficiaries of NACRDB credit facilities in the state.
1.8 ORGANIZATION
The
organization of this work takes the following format; chapter one is the
general introduction which explains the purpose at this study and the statement
of problem. The statement of hypothesis, scope and limitations as well as the
method of the study incudes in this section.
Chapter
two with a review available literature on the subject of study to establish the
theoretical framework.
Chapter
three deals with the research design, sampling procedure adopted questionnaire
design, data collection and problem uncounted in the process.
Chapter
four deals with the problems of agricultural credit, questionnaire analysis,
data on NACRDB staffs and appraisal of NACRDB on agricultural development.
Chapter
five deals with the conclusion; summary conclusion, major findings, recommendations.
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