Sustainable Agricultural Financing as a Pathway to Economic Prosperity in Nigeria

The study examined the effects of agricultural finance on agricultural sector performance in Nigeria using annual time series data. The data for the study are from the Statistical Bulletin of the Central Bank of Nigeria (CBN). The contribution of agriculture to GDP was used as a proxy for agricultural sector performance, while agricultural loans from commercial banks, rainfall, government expenditure on agriculture and interest rates were used as proxies for explanatory variables. After uniting in the order of integration, Johansen’s cointegration approach was used to control for the long-run relationship between the variables. Vector autoregressive estimation of the vector correction mechanism is used to examine the speed of adjustment of the variables from short-run dynamics to long-run equilibrium. The study found that there is a long-term relationship between the variables. More specifically, the agricultural credit guarantee scheme has a significant and long-term effect on the contribution of agriculture to GDP. Lending by commercial banks to agriculture has shown a positive and significant effect on the contribution of agriculture to GDP during the reporting period. The coefficient of multiple determination explains the variation in the dependent variable explained jointly by the independent variables. The study recommends that there should be an increase in the amount that the Agricultural Credit Guarantee Scheme injects into the sector on an annual basis and that appropriate supervisory measures be implemented to ensure the effective application and use of the money, which commercial banks encourage growth. of the agricultural sector by providing loans and advances when necessary to encourage citizens to engage more in commercial agriculture, for the federal government to intervene in the agricultural sector with a massive irrigation project that will provide a lasting solution to the problem of water supply, filling the gaps often created by dry seasons and allowing agricultural production to be spread throughout the year, that the government will also improve the spending of its agricultural sector to always benefit from the advantages of the sector in terms of fertilizers and heavy machinery.