Full Project – Impact of effective financing of the agricultural sector on a depressed economy
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CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Kogi State is endowed with sustainable natural resources, it has the potentials of becoming the strongest agricultural base of Nigeria. The natural resources include, a 2.8 million hectares, and ecological diversity, which enables the state to produce a wide range of crops and livestock’s, forestry and fishing products.
Steps have been taken to export the economy’s productive base, price stability self- reliance and social equity, development plan from 1970-1985 (i.e. country as whole) was dominated by the oil sector and was therefore highly vulnerable to external shocks, caused by oscillating petroleum prices in the international market.
In addition, cheap agricultural products all to fore as importation of such goods depressed domestic production in order to amend these economic policy distribution, a structural adjustment programme (SAP) was introduced between 1986 and 1992. As a result, the Gross Domestic Product (GDP) which had been on decline at 2% rate per annum registered a positive growth at 5% rate per annum during this period.
Structural adjustment programmes also provided incentives, which brought about increased agricultural exports. Inspite of these incentives, petroleum still provides nearly 90% of foreign exchange earnings and 80% of government revenue, which deteriorated the economy. The current economic environment characterized by high, inflation, high level of unemployment, low capacity utilization in nearly all industries, deteriorating purchasing power and considerably lowered per capital in GDP.
Kogi State as one of the developing states in Nigeria according to Linus (2006) “ is an agriculturally endowed state with about 70-80% of the population engaged in agriculture which supplies bulks of the state’s food and agro-allied materials”.
Agriculture is not in a strong competition position with other sectors to acquire or obtain investment and productive credit from the financial institutions. Lack of capital and too little institution are core challenges of many farmers in numerous states across the nation.
In spite of all these problems, various attempts were made to solve them, agriculture still has to be financed to boost and sustain the economy although, depressed with proper motivating steps and programmes in place to achieve the aims and focus of financing it.
1.2 Statement of the Problem
The Nigerian Economy has been experiencing economic recession since 1980 with Kogi State partaking in this recession as it stand as a vital reference in terms of the nations failure to foster agricultural development as an integral part of its economic policy. Agriculture, which is the main stay of the economy, has a slow growth rate and this has caused the agricultural sector to fall behind those of service and manufacturing industries.
Poor credit facilities have been identified as a major inpediment for improving agricultural production in Kogi State.
Agricultural is losing its grip on the economy and becoming depressed in favour of oil, limestone and iron mainly in the state. Yet, despite the depressed state of the economy, it must be financed because it is the hope of greater future of Kogi State and Nigeria as a whole especially in this period of recession.
It is against this background that the researcher is compelled at looking into the problem of agriculture financing in Kogi State with a view to coming with useful suggestions on the effect agriculture finance could have on the agricultural productivity this bring out Kogi State, nay Nigeria from the present recession.
1.3 Objectives of the Study
The study is designed specifically to attain the following objectives:
- To identify the major sources of finance available to the Kogi State Agricultural sector.
- To appraise the effectiveness of bank credit facilities on the development of the agricultural sector in the state.
- To examine problems in financing agricultural production and how government will attempt to solve them.
1.4 Statement of Hypothesis
The following null and alternative hypotheses were formulated to guide the study.
Ho is representing the null hypothesis
Hi is representing the alternative hypothesis
Hypothesis I
Ho: There are no sources of finance available to Kogi State agricultural sector.
Ho: There are sources of finance available to Kogi State agricultural sector
Hypothesis II
Ho: Bank credit facilities are not effective in Kogi State
Ho: Bank credit facilities are effective in Kogi State
Hypothesis III
Ho: The Agricultural sector is not faced by some problems
Ho: The Agricultural sector is faced by some problems
1.5 Significance of the Study
This research work will be of help to Kogi State government, and her 21 local governments area and even the general public at large in knowing what and how agriculture issues can be solved.
It will also help future researchers who may want to carryout research on issues like this.
The study would be a ready material for students of higher institutions of learning to tap from.
1.6 Scope of the Study
This study covers the period 2010 to 2015. The form are the concept of finance. An overview of Nigerian Economy (2010 to 2015), issues and prospects of Agricultural financing in Nigeria, review of government policies on agricultural finance, sources of fund for agricultural through financial intermediaries, prudential regulation and supervision for agricultural finance, the role of agriculture in economic development, and the challenges of financing agriculture in Nigeria.
1.7 Limitations and Constraints of the Study
A lot of setback and hindrance were encountered in the process of gathering relevant materials and data for this research work. Notably, among there is financial problem, which affect this work.
Another setback is the combination of class work with project. Since the project and other class work are both necessary for the Higher National Diploma (HND) certificate. The research time will be allocated to cover all these problems.
Lastly, there was inadequate material for the review of this project work, which made it difficult for the research to undertaken an indepth study.
The research work was educative, accounting interesting and successful.
1.8 Definition of Key Terms
Agriculture: A practice of cultivating the sold and rearing of animal in Nigeria.
Credit: Money given by government or individual to farmers to continue and enhance productivity in agricultural practices.
Development: A stage of growth or advertisement in the economy with favourable balance of payment.
Depressed Economy: A stage where the economy is unfavourable and characterized with infection, import rate, low per capital income, low exchange rate etc.
Deteriorating: The prospects of the agricultural sector are no longer promising and the situation becoming pathetic to bear.
Ecological Environment: This is the interaction of individual people with the environmental behaviour to solve issues.
Economy: The wealth and resources of a country in totality of all sector.
Equity: To strike a balance between agriculture and other sector of the economy.
Finance: Monetary finance for something or for the agricultural finance in the Nigerian economy.
Institution: A deliberate effort planning and executing the project invested into produce qualitative and profiting result in the economy.
Importation: A way of interacting with the forces of demand to meet the need of the people through foreign supply of the required goods.
Oscillation: This is the movement along the same horizon in which there is increased or decreased between points or indices of measuring the role of growth of the economy’s .
Prospects: Expectation of success when other equipments of success are made available.
Reliance: Reliance on programme set up to boost agriculture, financing.
Vis-a Viz: Relating the agricultural sector to other sector of the economy.
Valuable: Agricultural sector could fail when all indices of substance are not in place.
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Full Project – Impact of effective financing of the agricultural sector on a depressed economy