Economic and Financial Review


Central Bank of Nigeria


Formal Lending, Agriculture, Nigeria, Agricultural Lending


Towards the attainment of the goals of the Nigerian agricultural sector, relevant policies have been formulated and implemented during the post-independence years. The agricultural credit policy, among several others, was aimed at ensuring adequate funds for the agricultural sector. The objective of this paper is to estimate the relationship between formal lending to agriculture and some assumed determinants of agricultural credit lending during the 1978- 98 sample period. Lending by financial institutions to the agricultural sector was viewed for the pi11pose of model development in this study as the "supply of credit" to agriculture. Thus, the sets of determinants of agricultural credit supply to the Nigerian agricultural sector was assumed to consist of economic themy, policy and other variables. The models specified were estimated using the usual least squares procedure. The interest rate variable was negatively related to agricultural credit supply during the 1978- 86 sub-period, contrary to expectations. This was explained based on the regime of interest rate regulation prevailing prior to 1987. However, there was a net positive response of agricultural credit lending to the lending rate after interest rate deregulation from 1987, inclusive. The variable for the prescribed minimum lending to agriculture prior to year 1996, related negatively and significantly to lending. That ;s, credit quota impacted negatively on lending to agriculture during the 1978- 95 sub-period. This negative response of credit lending to the prescribed minimum lending to agriculture was sustained even after the abolition of the policy in 1996.

Author Bio

Dr. Dayo Phillip is of the Department of Agricultural Economics and Farm Management, University of Agriculture, Abeokuta, Ogun State

Publication Title

CBN Economic and Financial Review





Recommended Citation

Dayo, Phillip (2001). Analysis of Formal Lending to the Agricultural Sector in Nigeria: 1978 - 98. CBN Economic and Financial Review. 40(3), 40-58.



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