CHAPTER ONE

1.0 GENERAL INTRODUCTION

1.1 BACKGROUND OF THE STUDY
Nigeria is the largest country in West Africa and shares its boundaries with
Cameroon on the East, Niger and Chad on the North, Benin on the west and the
Gulf of Guinea on the south. Its topography consists of the northern savannah, the
middle belt tropical rainforests and the southern mangrove swamps. Anyanwu
(1979) observed that the significance of the agricultural sector to human existence
generally cannot be over emphasized in an emerging economy such as Nigeria.
This underscores the contribution of agriculture to the overall development
of the economy especially in emerging economies which is apparent in the
provision of gainful employment, provision of increased food supplies, provision
of capital, capital formation, increasing foreign exchange and increase in the
welfare of the citizens through wealth creation among others. Tomori (1979)
posited that, the Nigerian agricultural sector has been seemingly, if not totally,
neglected with the discovery of oil. This is evident in the sharp decline in the
contribution of agricultural sector to the gross domestic product (GDP) from 64%
in 1960 to 35% in 1988 and presently, the agricultural sector in Nigeria contributes
less than 30% to GDP, with crop production accounting for an estimated 85% of
this total, livestock 10% with forestry and fisheries contributing the remaining 5%.
Compared with other African and Asian countries, especially Indonesia, which is
comparable to Nigeria in many respects, economic development has been
disappointing because Nigeria has become one of the poorest countries in the
world.

According to Nzotta (2004), banks play very important roles in the

economic development of any country. Banks, which are also known as financial

1
intermediaries provide loans and credits to deficit units. This sector is needed to
provide the necessary funds for the agricultural sector to acquire land, mechanized
farming implements, raw materials and so on which invariably will lead to an
increase in agricultural productivity.

Financing the agricultural sector is necessary because agricultural sector has

a multiplier effect on a nation’s socio-economic and industrial fabric, as a strong
and efficient agricultural sector would enable a country to feed its ever growing
population, generate employment, earn foreign exchange and provide raw
materials for industries (Ogen, 2009). It also has the potential to be the industrial
and economic spring board, from which a country’s development could takeoff,
shape the landscape and provide environmental benefits but the agricultural sector
cannot do this without the funds needed.

1.2 STATEMENT OF THE PROBLEM

The function of the banking sector is financial intermediation which

involves the processes through which funds and financial resources are channeled
from the surplus sector to the deficit sector, Obilor (2009). But banks, precisely the
commercial (deposit money) banks, have refused to lend to agriculture which they
believe that is a risky endeavor because of such factors like time lag in agricultural
production and seasonality in the case of crop production.

In Obilor (2009)’s view, despite various instruments used by the Central

Bank of Nigeria such as moral suasion and even the formulation of various
agencies and programs by successive governments such as the Agricultural Credit
Guarantee Scheme (ACGS), the amount of loans advanced to the agricultural
sector is still a far cry from what is needed to facilitate and effectively fast track
the needed growth in the sector.
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 The aim of this research work is to evaluate how far banks have gone over
the years (1981-2014) in giving financial support to the agricultural sector in form
of loans; and recommendations as to how best both sectors can work together to
achieve a growth in this real sector which has the capacity to boost the nation’s
GDP exponentially.

1.3. RESEARCH QUESTIONS

The following research questions were developed:

i. To what extent does banks credit influence agricultural productivity?

ii. At what level does banks’ interest rate influence agricultural productivity?

1.4 OBJECTIVES OF THE STUDY

The following are the objectives of this study:

i. To evaluate the impact of banks credit on agricultural productivity.

ii. To study the impact of banks interest rates on agricultural productivity

1.5 SIGNIFICANCE OF THE STUDY

It is believed that the outcome of this study shall impact positively on

various stakeholders.

It will expose the general public of the need to show up the capital base
available to the agricultural sector to enable the effective utilization of Nigeria’s
enormous manpower and great landmass. Once this is done, the government and
policy makers can pay attention to other sectors of the economy.

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 It shall also be significant to the government because it will make them
aware of the contributions of the banks to agricultural productivity and also
determine what more can be done in terms of policy formulations to enhance more
access to finance and protection of the agricultural finance arm.

It shall be of vital importance to students of finance and other related

disciplines as it will infuse them with pragmatic knowledge on the role agriculture
can play in an economy if it is adequately funded by the banks.

It will also serve as a basis for further study and for the partial fulfillment of
the requirement for the award of National Diploma (ND) of the research.

1.6 SCOPE OF THE STUDY

The study studies the overall impact and contribution that the banks have
had on enhanced agricultural productivity in Nigeria.

The data used for this research work will be gotten from the Central Bank of
Nigeria, Statistical Bulletins, World Bank Development Indicators as well as the
Annual Abstracts of Statistics published by the National Bureau of Statistics,
relevant text books, journals, articles, and printed relevant materials from the
internet.

1.7 LIMITATION OF THE STUDY

The limitation of the study will enable the researchers to demonstrate the
techniques learnt in examining the problems that they are faced in the back of
agriculture in financing agriculture and also try to find the solution and suggestion
to the problem therefore, it is also useful to the organization for which the research
is based in because it discussed the answer to the problem facing it. The student
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who to the same research will also benefit farm from because it provided system of
approaches based previous of the research on the same project matter or (Topic)
and how to carry out presenting.
1.8 HISTORICAL BACKGROUND OF THE CASE STUDY

Bank of Agricultures (BOA) history can be traced to the establishment of

Nigerian Agriculture Bank (NAB) in 1973. NAB was a government initiative to
fund agriculture development projects in the country, in particular small-scale farm
holders that may not have enough collateral to obtain credit facilities from
commercial banks. At the time, many farmers were considered high risk
borrowers by commercial lenders and NAB was established to provide
Microcredit to small farmers and on-lending to agricultural firms. In 1977, when
Umaru Mutallab was cooperatives minister, the government of Nigeria (FGN)
initiated new guidelines for financing cooperatives. In addition, FGN provided
additional capital to NAB to support cooperative societies in the country.
Subsequently, NAB was transformed to become the Nigerian Agriculture and
Cooperative Bank. The government also specified new guidelines for commercial
banks to set aside a minimum percentage of their loan portfolio to the agricultural
sector. Banks that were unable to meet the threshold transferred the remainder
of funds to the central bank for onward disbursement to farmers through NACB.

In 2000, the government merged the activities of NACB, People's Bank and
Family Economic Advancement Programmed to form the Nigerian Agriculture,
Cooperative and Rural Development Bank. Prior to the merger, All three entities
engaged in micro-financing.

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BOA has struggled to control the number of non-performing loans in its portfolio
which has hampered its ability to provide sustainable support to the agricultural
sector.

1.9 DEFINITION OF TERMS

DMBC: Deposit Money Bank’s Credit: is a debt provided by a bank to an

entity (organization or individual) at an interest rate, and evidenced by a
promissory note which specifies, among other things, the principal amount
of money borrowed, the interest rate the lender is charging, and date of
repayment.

DMBL: Deposit Money Bank Loan: these are loans given by resident

depository corporations and quasi-corporations which have any liabilities in
the form of deposits payable on demand, transferable by cheque otherwise
usable for making payments

DMBLR: Deposit Money Bank’s Lending Rate: is payment from a

borrower or deposit-taking financial institution to a lender or depositor of an
amount above repayment of the principal sum (i.e. the amount borrowed).

AQ: Agricultural Output: final agricultural output measures the value of

agricultural products which, free of intra-branch consumption is produced
during the accounting period and before processing, is available for export
and or/ consumption. Is measured as the ratio of agricultural outputs to
agricultural inputs

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 CHAPTER TWO
2.0 REVIEW OF RELATED LITERATURE
2.1 INTRODUCTION
The importance of the agricultural sector to human wellbeing cannot be
overlooked in a promising economy like Nigeria. This is in consonance with the
fact that Nigeria as a country is highly blessed with plentiful natural resources
including land and labour.
2.2 THE CONTRIBUTION OF AGRICULTURE TO ECONOMIC
DEVELOPMENT
This underscores the contribution of agriculture to the overall development
of the economy especially in emerging economies which (Abayomi, 2002) argues
is apparent in the provision of increased food supplies, provision of gainful
employment, provision of capital and capital formation, increasing foreign
exchange and increase in the welfare of the citizens through wealth creation among
others. (Ahmad et al., 2007) observed that the Nigerian agricultural sector has been
significantly neglected since the discovery of oil. This is evident in the sharp
decline in the contribution of agricultural sector to the gross domestic product
(GDP) from 65% in 1960 to 34% in 1989 and presently, the agricultural sector in
Nigeria contributes less than 35% to the overall GDP, with crop production
accounting for an estimated 80% of this total, livestock 13% with forestry and
fisheries contributing the remaining 7% (Okolo, 2004). With the declining trend in
the agricultural sector’s contribution to the GDP, there is every need for
meaningful efforts in enhancing productivity in the agricultural sector. (Nwaigbo,
1981) holds that before the discovery and exploitation of oil in commercial
quantities, agriculture was the mainstay of the Nigerian economy. Before the
advent of petroleum exploitation, the agricultural sector provided livelihood for

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about 70% of the working population (Oladeji et al, 2004) and contributed 70% of
the GDP, which reduced to less than 42% in the period 1999–2000 (CBN 2003).
In his book, Obasanjo (1998) opined that supporting agriculture by way of finance
and subsidies have been responsible for distorting the financial markets; this leads
to higher financing costs in the manufacturing and other sectors, and can slow
down the rate of growth of the domestic economy generally. Meanwhile the US
and other countries continue to support their agricultural markets through subsidies
and other available means.
The problems faced by the Nigerian agricultural system are numerous and
they must necessarily be tackled before it becomes a critical issue and leads to
great issues of which malnutrition and hunger are included. Of these problems,
(Ndubizu , 2003) notes that the leading issue is the inadequate provision of finance
for production to meet the food production needs of the nation. Other problems
include implements and equipment availability, cost and adaptability. These have
made it impossible for the sector to realize the immense benefits of mechanization.
Lewis (1954) cited in CBN (2000) theorizes that a highly skilled agricultural
labour force can sustain the sector in the quest for surplus food while surplus
labour is released to industrial and services sector. Unfortunately, this cannot hold
true in Nigeria for many reasons, key of which is the high proportion of peasant
and uneducated farmers.

However an important aspect that has emerged in recent decades is that

credit is not only obtained by the small and minor farmers for survival but also by
the large scale farmers for enhancing their income and also maximizing output.
This clearly indicates the apparent importance of financial resources to the
agricultural sector for enhanced productivity (Nzotta 2009). Having recognized the
potential of the agricultural sector which is aptly described in theoretical literature
as a sector with enormous prospect that could solve the problem of unemployment,
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poverty and poor revenue generation for the various tiers of government intensive
efforts have so far been made by various stakeholders including the government,
the private sector and individuals to pull resources to the agricultural sector for a
more robust productivity (Nzotta, 2009). However such efforts seem not to have
transmitted into the real growth in agriculture output. This is evident in the fact that
since the late 1970s, the growth of the agricultural sector has been slow and
volatile even in the face of increased credit to this sector in Nigeria. In the wake of
these views lie some fundamental questions: What is the nature and amount of
Deposit Money Banks’ credit to the agricultural sector? Does Deposit Money
Banks credit significantly impact on agriculture output? This critical analysis
becomes imperative given the fact that the impact and access to Deposit Money
banks’ credit by the agricultural sector has severe implications for the overall
macroeconomic variables of poverty reduction, job and wealth creation as a result
of income generation which is of critical importance to an emerging economy like
Nigeria (Oloyede, 1999). Therefore this research seeks to study the impact of
Deposit Money Banks’ credit on the agricultural output performance in Nigeria.

2.2.1 Theoretical Framework

The theoretical framework of this study is anchored on the following theories

which are relevant to its discourse. They are:

2.2.2 Multiple-Lending Theory

This theory reveals that banks should be less inclined to share lending (loans
syndication) in the presence of well-developed equity markets and after a precise
consolidation, since both, outside equity and mergers and acquisitions increase
banks’ lending capacities, thereby reducing their need for greater diversification
and monitoring through share lending (Ewert, Szczesmy and Schenk, 2000;
Jhingan, 1990; Ajie, Ezi, Akekere and Ewubare, 2006).
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2.2.3 The Agriculture Based Economic Development Theory

This theory propounded by Wiggins E. (2006), postulates that agricultural–

based strategy for economic development requires a technical, institutional and
financial- incentive change that will raise the productivity of small farmers.
Wiggins explains that agricultural financial incentives can play a dual role in the
process of economic development. Firstly, it will produce more food and it will
also produce many great jobs needed.

2.2.4 Commercial Loan Theory

The theory upon which this study is built is the commercial loan theory. The
commercial loan theory also referred to as the Real Bills Doctrine states that a
commercial bank should advance only short term self-liquidating productive loans
to business firms, self-liquidating loans are those loans which are meant to finance
the production and movement of goods though the successive stages of production;
storage, transportation and distributions. When such goods are ultimately sold, the
loans are considered to liquidate themselves automatically, (Jhingan, 1990).

2.3Conceptual Framework
The need to increase food security, industrial development and our export
base calls for a strong focus on agriculture since agriculture is a reliable source of
industrial and food supply. Agriculture is the cultivation of land, rearing of animals
for the purpose of production of food for man, feed for animals and raw materials
for our industries (Anyanwu et al 1997) defined agriculture as ‘the cultivation of
the land for the purpose of producing food for man, feed for animals and fibre or
raw materials for industries. It also includes the processing and selling of crops.
With regards to the above viewpoint, the pivotal role of agriculture in the
individual and the country's life at large cannot be overemphasized.
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2.4 Literature Review
Finance is a key component in every business endeavor required for the
establishment and running of any business. It is the lifeblood of any business.
Funds are required for the purchase of capital equipment such as land and building,
machinery and other fixed assets as well as working capital. It is worthy of note
that with growth in activities in any business, comes increased financial needs and
increased access to funding would facilitate expansion. The agric -business
involving primarily food production, distribution, processing, marketing is not an
exception. (Gbenga, 2006) suggested that deepening financial intermediation may
promote economic growth by mobilizing more investments, and lifting returns to
financial resources, which raises productivity.
He defined finance as a system which incorporates the circulation of money,
granting of money credit, investments as well as provision of banking facilities.
One aspect of finance therefore is the provision of credit facilities to the deficit
economic units by deposit money banks. Agricultural finance is the acquisition and
use of capital in agriculture. (USAID, 2010) defined rural agricultural finance to
include all types of finance available to farmers. It is a field of work in which
people aim to improve access to efficient sustainable financial services for the
agricultural industry, including farming and all related enterprises
Essang & Olayide, (1974) held that deposit money banks are monetary institutions
owned by either the government or private businessmen for the purpose of profit.
In pursuit of the profit, the bank undertakes a number of functions. One of these
functions is the acceptance of deposits from the public, these deposit are in turn
given out as credit to traders, industries, farmers, etc, which lead to more
production and employment (Stephen & Osagai, 1985, Ekezie, 1997; Ijaiya &
Abduraheem, 2000; Ugwu, 2010).

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2.4.1 The Concept of Bank Credit
Credit is the extension of money from the lender to the borrower. (Spencer,
1977) noted that credit implies a promise by one party to pay another for money
borrowed or goods and services received.
Credit has been defined by (Okereke, 2003) as the fund base and non-fund base
activities of banks that expose them to risk of varying degree. This definition is
widely accepted since it presents the basic element of credit which is risk. Since
the payment of both the principal amount and the interest is done in a future date, it
follows that the risk of default could be inherent. Supporting the view of Okereke,
is the NDIC prudential guidelines of 1990 which held that credit comprises an
aggregate of all loans, advances, overdrafts, commercial papers, bankers
acceptances, bills discounted, leases and guarantees (NDIC,1990).
Agricultural credit is the credit granted to farm and ranch operators to assist in
planting and harvesting of crops to support the feeding and care of livestock
(Muftau, 2003).
2.4.2 Trends in Agricultural Finance in Nigeria
In absolute terms, the trend of loans extended to the agricultural sector by
commercial banks in Nigeria showed a consistent upward trend over the years.
Prior to the banking sector consolidation, agricultural credit was relatively poor
fluctuating between N2billion to N25billion from 1987 to 1995. In 1996,
agricultural credit rose significantly to about N33billion, but declined to about
N31billion in 1999. The inception of democratic governance saw the growth of
agricultural credit to about N56billion and N67billion in 2001 and 2004
respectively. At the end of 2010, loans to agriculture by commercial banks in
Nigeria had increased to N148billion (CBN 2010).

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 In terms of percentage of bank loans advanced to the agricultural sector,
from the period 1987 to 1996, the agricultural sector received between 13-19% of
the total loans by commercial banks.
For agricultural practice to be meaningful, one of the enabling factors is addressed
by availability of adequate credit to finance agricultural production. The
agricultural lending market in any country is made up of the participating financial
institutions and units that can effectively lend resources to facilitate the production
of farm produce, crops and livestock. These markets are primarily made up of
deposit money banks (DMBs) and other financial institutions (Comptrollers
Handbook 1998) firms and individuals. However, the market also includes
specialized institutions such as Nigeria Agricultural Co-operative and Rural
Development Bank (NACRDB), which is the principal institution involved in
agricultural financing in Nigeria. The banks have been playing prominent roles and
will continue to do so under a package of incentives. The life insurance companies
can find useful avenues to invest their long-term funds by buying equipment for
hire. The informal financial market which includes the cooperatives, family and
friends who can also make funds available to interested farmers will continue to be
active as before. Gurdenson et al. (2005) believe that this represents a cost in
agricultural delivery, which in the Nigerian environment farmers cannot avail
themselves of available credit.

For the lenders in the market, the most significant risk is credit, which has
been noted, could arise from a number of factors ranging from bad harvest to poor
market prices. However, underwriting or guarantee can adequately address this.
Other risks faced by lending in this market are liquidity, price, strategic and
interest rate risks. According to the CBN 2000, the face of the agrarian culture of
Nigerians has changed somewhat to reflect a dwindling of interest of the youth in

13
the sector in addition to the perennial problem of lack of fertilizer to improve crop
yields.

2.4.3 Intervention by the Central Bank of Nigeria

A. Agricultural Credit Guarantee Scheme Fund (ACGSF)
This scheme was established by the Federal Military Government under the
Agricultural Credit Guarantee Scheme Fund Decree 1977 (Decree No.20) and as
amended on 13thJune, 1988. Thus, the Agricultural Credit Guarantee Scheme Fund
formally started operations in 1978.
A CBN internal survey in April 2012 noted that a total of 3,561 loans valued at
N502.68 million were guaranteed by six (6) DMBs and some Microfinance banks.
This brought the number and value of loans guaranteed in the year to 6,108 valued
N1.34billion. Cumulatively from inception in 1978, the figure stood at 760,636
loans valued at N53.68 billion. The distribution of number of loans guaranteed by
purpose indicated that food crops accounted for 3,384 loans (95.0%), followed by
livestock and cash crops which recorded 123 loans (3.5%) and 24 loans (0.7%)
respectively. Fisheries, mixed farming and others recorded 15, 1 and 14 loans,
respectively.
B. Agricultural Credit Support Scheme (ACSS)
The Agricultural Credit Support Scheme was established through the initiative of
the Federal Government and the Central Bank of Nigeria with the support and
participation of the Bankers Committee to finance large ticket agricultural projects
with an interest rebate of 6% upon timely repayment of the facility. The
agricultural processes covered under the ACSS include:
A. Establish mentor management of plantations;
B. The cultivation or production of crops;
C. Livestock(animal husbandry, poultry, fishery etc.);and
D. Farm machinery and hire services.
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The purpose of the ACSS is to develop the agricultural sector of the Nigerian
economy by providing credit facilities to farmers at single digit interest rate. This
is to enable farmers exploit the untapped potentials of the sector with a view to
reducing the cost of agricultural production, and increase output on a sustainable
basis. The expected outcome is a fall in prices of agricultural produce, especially
food items, thereby leading to reduction in inflation rate, generate surplus for
export, diversify the revenue base and thus, increase foreign exchange earnings for
the country. At end-April 2012, no rebate was paid.
C. The Commercial Agricultural Credit Scheme
The CACS was established by the CBN in collaboration with the Federal Ministry
of Agriculture and Rural Development as part of the developmental role of the
CBN. It was funded through the issuance of FGN Bond worth N200 billion. The
essence of the scheme was to promote commercial agricultural enterprises in
Nigeria. The fund was released to the Bank of Industry and made available to
DMBs for on-lending to farmers/state governments at single digit interest rate.
State Governments could borrow up to N1.0 billion for on-lending to farmers'
cooperative societies and other areas of agricultural development provided such
initiatives/interventions were in line with these objectives (CBN Bulletin 2012).
So far twenty nine (29) states participated in the scheme. In April 2012, the sum of
N2.938 billion was released to 3 banks with respect to 3 projects bringing the total
to N178.269 billion with respect to 227 projects (198 private promoters and 29
State Governments). By value chain 47% of the private projects were for
production activities, while 38% were for processing activities. Marketing and
storage accounted for 9% and 6% respectively. For the state sponsored projects,
processing accounted for 51% followed by production which accounted for 33%.
Other activities shared the remaining 16% (CBN Bulletin 2013).

15
 D. Nigeria Incentive-Based Risk Sharing System for Agricultural Lending
(NIRSAL)
Available statistics revealed that the CBN had approved N75 billion for the
take-off of Nigerian Incentive-Based Risk Sharing in Agricultural Lending
(NIRSAL). It had also guaranteed 75% loans provided by DMBs to farmers across
the 36 states of the Federation and the Federal Capital Territory as part of
concerted efforts to transform the agricultural sector. The guarantee would be
issued by NIRSAL to the farmers in the states and the FCT through commercial
banks and other financial institutions.

The initiative (NIRSAL) mobilized financing for Nigerian agribusiness through the
use of credit guarantees to address the risks associated with default. It was targeted
at encouraging financial institutions to be more receptive to doing business with
agribusinesses. It was aimed at creating greater access to finance through
integration of end-to-end agriculture value chains such as input producers, farmers,
agro dealers, agro processors and industrial manufacturers with agricultural
financing value chains– loan product development, credit distribution, loan
origination, managing and pricing for risk, and loan disbursement.

2.4.4 The Relationship between Deposit Money Bank Credit and Agricultural
Output in Nigeria

Deposit money banks’ are monetary institution with the primary objective of
servicing the economy through their financial intermediation function; this is
normally carried out through the acceptance of deposits from the surplus public
and consequently lending the deposit as credit especially to agricultural and other
sectors which is expected to increase agricultural output and increase famers’
income. Agricultural credit could also be viewed as funds granted by banks,
government to farmers/agro allied practitioners which will be paid back in the
16
future to assist them in carrying out their agricultural practices with improved
inputs for increased output.

2.4.5 Deposit Money Banks’ Credit to the Agricultural Sector in Nigeria

Since its inception, the banking system has been providing credit to the
Nigerian economy. In order to examine the role of bank credit to the economy, the
aggregate bank credit to the economy is used to estimate its impact growth, of
which Gross Domestic Product is a proxy. This credit is classified into credit to the
public sector (government) and credit to the private sector. This section presents
and examines credit to these sectors from 1992 to 2008 with a view to assessing its
impact on the growth of the Nigerian economy.

Data on aggregate domestic credit of deposit money banks reveal that between
1993 and 1995, credit to the economy grew from 65%to 67.8%. Between 1996 and
2009, credit to economy fluctuated as follows with 34.7% in 1996, 25.9% in 1997,
14.8% in 1998, 55.7% in 1999, 42.1% in 2000, 32.7% in 2001, 37.9% in 2002,
15.3% in 2003, 38.4% in 2004, 20.5% in 2005, 40.2% in 2006, 86.1% in 2007,
45.7% in 2008 and 24.1% in 2009. The highest growth rate was recorded in 2007,
which could be attributed to the gains on post-consolidation of Nigerian Banks
(CBN Bulletin 2013).

2.5 Empirical Evidence of the research Subject

Several empirical studies on the on agricultural financing and output have been
reviewed. For instance, Agunuwa et al (2015), Chisasa (2015), Uzomba et al
(2014), Ogbanje et al (2012), Tasie and Offor (2013), Iganiga and Unemhilin
(2011) and Ikhani and Idoko (2013) studied impact of various financial resources
available to the agriculture on agricultural output and found that, for efficient and
optimum production of agricultural resources key attention must be given to the
finance which is the life wire or a coordinator of all other factors of production.
17
Melits and Pardine in Ojo (1978) investigated the factors that affect the demand
and supply of deposit money banks’ loans and advances, using a simple
simultaneous equation method, and estimation strong results were obtained. The
results revealed that the constraints on the capability to grant loans and advances
were identified as capacity of deposi tmoney banks’ assets, interest on lending,
alternative earning assets cost per dollar on bank deposit liabilities. In a similar
study, Ojo (1978) also identified that liquidity ratio was seen as an important
variable in determining the supply of loans and advances in Nigeria. Ojo (1999) in
a study of roles and failures of financial intermediation by banks in Nigeria,
revealed that money deposit bank can lend on medium and short term basis without
necessarily jeopardizing their liquidity, if they must contribute meaningfully to the
economic development, the majority pattern of their loan should be on a long term
nature rather than on a short term period. However, Oloyede (1999) claims that it
is generally acknowledged that money deposit banking by its nature is highly
prone to volatility and fragility–whether arising from exogenous shorts or
endogenous policy measures–and therefore, amenable to regulations and
supervision.

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 CHAPTER THREE

3.0 METHODOLOGY

3.1 INTRODUCTION

This chapter sets out various stages and phases that were followed in completing
the study. It involved the collection, measurement and analysis of data.
Specifically the following subsections were included; research design, population
of the study, sample and sampling technique, sources of data, instrument of data
collection and method of data analysis.

3.2 RESEARCH DESIGN

The research adopted a descriptive design to enable the study find answer s to the
research questions. This was also aimed at achieving the objectives of the project
as listed in chapter one.

3.3 POPULATION OF THE STUDY

The target population of this study is the staff of Bank of Agricultural (BOA)
Birnin Kebbi Branch. There are two units/departments namely; Branch Service and
Marketing department in the Bank with a population of 25 staff.

3.4 SAMPLING TECHNIQUES

A sample size of 20 staff was chosen from our case study group, using the simple
random sampling technique. This was aimed at giving equal chances to all the
elements in the population.

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3.5 SOURCES OF DATA
The data source in this study includes both the Primary and Secondary data in
order to achieve the objectives of this research work. Primary data is sourced from
structured questionnaires that are distributed to the staff of Bank of Agricultural in
Birnin Kebbi, Kebbi State.

The Secondary data sourced include the use of relevant literatures such as online
Journals, textbooks, thesis. The authors whose works were used for this research
were acknowledged by the way of referencing

3.6 INSTRUMENT OF DATA COLLECTION

The instruments used for data collection include the use of; direct observation, face
to face talks and structured questionnaires that is distributed to the staff of Bank of
Agriculture Bimin Kebbi.

3.7 METHOD DATA ANALYSIS

The data collected from the field were analyzed using descriptive statistics and
inferential statistics. The descriptive statistics employed the use of frequency,
percentage and Likert scale while the inferential statistics employed the use of
Regression analysis for the test of significant relationship from the hypothesis.
The data collected is run through this model so as to clearly evaluate the role of
deposit money banks in financing of agriculture in Kebbi State using Bank of
Agriculture Bimin Kebbi as the case study.

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