Development Finance and the Productivity of Agricultural Sector in Nigeria

This study examined the effect of development finance on the productivity of agricultural sector in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical Bulletin from 1990-2023. Productivity of agricultural was modeled as the function of Agricultural Grantee scheme as percentage of gross domestic product, Microcredit from microfinance banks as percentage of gross domestic product, Agricultural development Bank finance of gross domestic product, Bank of industry finance of gross domestic product and Commercial bank credit to agricultural sector of gross domestic product. Multiple regressions were formulated. Unit Root test, co-integration, granger causality and Vector Error Correction model was used. The study found the variables were stationary at difference, presence long run and uni-directional causality from agricultural credit grantee scheme to agricultural productivity. The variables were found to have positive effect on agricultural productivity except commercial banks credit. From the findings, we concluded that development finance as modeled in the study have significant effect on agricultural productivity. We recommended Government should continually increase the funding and operation of the agriculture credit guarantee scheme fund, reduction of monetary policy rate on the agricultural sector and that Central Bank of Nigeria should mandate commercial bank to set aside a certain amount of money from their yearly profit to finance agriculture.