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COMMERCIAL BANKS AND RURAL AGRICULTURE FINANCING  IN NIGERIA (A CASE STUDY OF FIRST BANK UYO)

CHAPTER ONE

BACKGROUD OF THE STUDY

1.1   INTRODUCTION

  Financing at any level involves the process of making funds available for the running of business, an activity, or a project either by individual, group of people or government. For any project to be successfully carryout, its require a lot of funds. Sometime, an individual, firm or Government may wish to execute project but may not have enough funds, in order to accomplish this project, they go on borrowing. Funding is the panacea for the success of any business or project.

In developed world, various institutions and organizations took active part in financing projects such as agriculture and health care services etc. Through funding, farmers are able to procure all necessary farm inputs such as seedlings, stems, fertilizers, pesticide and machinery etc. which enable them to produce in a  large quantity both for local and foreign consumption.

In developing countries like Nigeria, little or no attention was given to Agriculture in term of financing in the past decade. That was why farmers were unable to procure essential Agricultural inputs for the production of enough food for both domestic and foreign consumption. Farmers were using crude farm tools and practiced primitive method of farming. This was attributed to the neglect of Agriculture by Government and other institutions.

Nowadays, the importance of Agriculture has been conceived all over the world and to bridge the gap of the neglect of Agriculture in of the passed, central Bank of Nigeria through various commercial banks committed to Agriculture financing. Financing Agriculture cover a wide array of agricultural activities arranging from production to processing and marketing (Bank Annual Report 1999). 

1.2   STATEMENT OF THE PROBLEM

This study is on commercial Banks and rural Agriculture financing in Nigeria. Financing of Agriculture nowadays becomes imperative because of vital roles Agriculture play in the development of a Nation.

Therefore, this study is undertaken to ascertain whether financial assistance to rural Agriculture were sufficient to boost Agricultural production.

Specifically the study was also carried-out to ascertain whether financial assistance to rural farmers increase income generating capacity of farmers and whether rural farmers actually repay the principal and interest charge by the commercial Banks. 

1.3   OBJECTIVES OF THE STUDY

Looking critically on the institutions responsible in financing Agriculture and the role of credit facilities in Agricultural development n Nigeria, this project seeks to achieve the following objectives:

(i)   To find-out whether commercial banks financial assistance to

rural farmers were sufficient to boost Agricultural production.

(ii)  To find-out whether financial assistance given to rural farmers

by commercial banks increases income generating capacity of farmers.

(iii) To find-out whether rural farmers were able to repay the

Principal and interest charge by the commercial banks. 

1.4   RESEARCH QUESTIONS

  The following research questions were formulated to guide the research on the study:

• Are commercial Banks financial assistance to rural agriculture sufficient to boost agricultural production?
• Do Incomes of rural farmers’ increases as a result of financial assistance given to them by commercial banks?
• Do rural farmers actually repay the principal and the interest charged by the commercial banks? 

1.5   RESEARCH HYPOTHESES

The following research hypotheses where developed based on the Nature of research questions used for this research study:

• Financial assistance to rural Agriculture by commercial banks are not sufficient to boost Agriculture production.
• Financing rural agriculture by commercial banks do not increase income generating capacity of farmers.
• Rural farmers do not repay principal and the interest charge by the commercial banks. 

1.6   SIGNIFICANCE OF THE STUDY

  It is believed that this study will create awareness in the mind of the farmers both men and women, agriculture extension officers, commercial banks and government that financing of agriculture aimed at boosting agricultural production. This study will also give a comprehensive framework and educates various institutions responsible for financing agriculture

The findings will also revealed not only to the farmers but the entire  public that Agriculture require assistance (financing) at all ramifications not only by commercial banks but by government, individuals and multi-National companies for food security and National development 

1.7   SCOPE OF THE STUDY

Having seen that financing of rural agriculture by commercial banks enable farmers to carry-out farm operations necessary for  production of enough food for domestic and foreign consumption. Therefore the researcher chose to investigate whether financial assistance given to rural farmers are sufficient to boost agricultural  production, increase income generating capacity of farmers and to find out whether farmers repay principal and interest to the commercial banks.

Specifically, the study was limited to the rural agriculture financing by First Bank Operating in Uyo Local Government Area of Akwa Ibom State. The study covered only commercial agriculture in Nigeria.