Agricultural Financing and Economic Development in Nigeria: A Study of Agricultural Credit Guarantee Scheme Fund (ACGSF)

Abstract

Finance is required to purchase farmlands, construct buildings, acquire plants, machinery, seedlings, hire labour and organize irrigation schemes just to mention few in the agricultural sector. Such fund is often collosal beyond the reach of peasant farmers. This is what has prompted the federal government to establish the Agricultural Credit Guarantee Scheme Fund (ACGSF) as a sub unit of the Central Bank of Nigeria (CBN), to guarantee credit facilities extended to farmers by banks up to 75% of the amount in default net of any security realized. This study appraises the roles, duties and functions of the ACGSF and the impacts its activities have in stimulating economic development in Nigeria. It examines factors militating against its effectiveness and makes recommendations on how its management can be improved upon. Questionnaire was administered on 125 farmers randomly selected from the South Western part of Nigeria to evaluate and assess the level of their awareness on the governmental agricultural financing activities of the ACGSF. Their views on credit potential benefits to the farmers were also sought. This is with the main aim of deciphering if the option is capable of providing the breathing space and the leeway for the much needed long term financing, capable of accelerated agricultural development. With 104 respondents returning the questionnaire, the data is analyzed with the chi square statistical tool. With the expected value remaining significant at a critical value of 99%, the study proves that Agricultural Financing Scheme such as ACGSF, has the tendency of enhancing macro economic development when properly managed and harnessed. The paper will be of tremendous importance to policy makers particularly stakeholders in the agricultural financing sectors.