Nigeria’s agriculture is diverse, presenting various opportunities. It includes four sub-sectors, namely; crop, livestock, fishery and forestry. The crop sub-sector accounts for about 90.0 per cent of agricultural production in Nigeria, followed by the livestock sub-sector which contributes about 7.0 per cent. Fishing activities contribute about 2.0 per cent and forestry activities account for about 1.0 per cent. However, Nigeria remains a food-deficit country blessed as it is with abundant agro-ecological resources and diversity. As reported by the Food and Agricultural Organization of the United Nations (FAO), the number of people undernourished has been on the increase, from 8.7 per cent of total population in 2007-09 to 11.2 percent in 2012-2014. This is because adequate attention has not been given to the agricultural sector, particularly after the discovery of oil in commercial quantities in the country. For instance, the proportion of government total recurrent and capital expenditure allocated to the agricultural sector between 1981 and 2014 has been less than 3.0 per cent compared with the 25 per cent recommended by the FAO, and the minimum of 10 per cent recommended by the African Union. Similarly, the agricultural sector’s share of total commercial banks sectoral allocation of loans and advances to the economy declined from the height of 19.6 per cent, attained in 1996 to 3.7 per cent in 2014. Meanwhile the Bank of Agriculture set up to focus on financing the sector has been plagued by inadequate capital and poor management. Other funding initiatives put in place to assist the agricultural sector have not been very successful as well due to the peculiar nature of agricultural production in Nigeria and hence, the preference for financing of commerce by financial institutions. It is therefore recommended that more financial resources be strategically directed at the agricultural sector for sustainable development of the Nigerian economy in view of the traditional role of agriculture in a developing economy.
KEYWORDS: Financing, Economic Development, Agriculture, Sustainability.
Economic development is a process whereby an economy’s real national income increases over a long period of time. The term economic development also refers to achievement by poor countries of higher levels of real per capita income and improved conditions of living for their people. That is an environment more like those prevailing in developed countries (Ojo, 2010). Sustainable development is defined as development that meets the need of the present without compromising the ability of future generations to meet their own needs (Akatugba and Ogisi, 2005). The principles that govern sustainable development are:
(i) the principle of intergenerational equity- which advocates the necessity to preserve nature for the benefit of future generations;
(ii) the principle of sustainable use- which implies that natural resources should be exploited in a sustainable or prudent or rational or wise or appropriate manner;
(iii) the principle of equitable or intra-generational equity- acknowledges that the use by one sector must take account of other sectors; and,
(iv) the principle of integration- suggests that the environmental consideration be integrated into economic or other development plan, programmes, and projects, and the developmental needs are taken into account in applying environmental objectives.
These principles are not mutually exclusive as there is the likelihood for them to overlap. The fundamental truth is that economic development and environmental protection are integrally related and interdependent and both are necessary and desirable to maintain and improve the quality of human life. From the foregoing, it is very clear that, while, maintaining development is a problem for rich countries, accelerating development is an even more pressing matter for poor countries if sustainable economic development must be achieved.
Funding consists of the financial resources required to transform the ideas of an entrepreneur into a viable project. It can take the form of loans, equity capital, venture capital, working capital or any other form (Raji, 2000). The role of finance in economic development is widely acknowledged in the literature. It is argued that financial intermediation through the banking system plays a pivotal role in economic development by affecting the allocation of savings, thereby improving productivity, technical change and rate of economic growth. However, credit –constrained groups such as small scale traditionally risk-appraised by lenders as the lower end of the credit market often face discrimination from formal credit purveyors, resulting in stringent credit rationing and high risk-premium charges, even if they secure credit. The repressive circumstances derives from their inability to pledge the traditional favoured securities such as mortgages, land, sterling shares or gilt-edges to back up credit proposals. (Evbuomwan, 2014). This is why it is important to pay particular attention to the financing needs of the Nigerian agricultural economy which is dominated by small holders who are often discriminated against by formal financial institutions though they produce the bulk of food consumed in the country and other agricultural commodities exported to earn foreign exchange. This is the subject of this paper as the title implies.
The rest of this paper is divided into four sections including this introductory section. The next section will enunciate the role of agriculture in economic development, highlighting the Nigerian agricultural development policies and strategies put in place to achieve them with specific emphasis on the financing initiatives. The third section will review in details the various financing programmes and their effect on the sector and the nation as a whole. The last section will summarise the paper and make suggestions where necessary for better financing of the Nigerian agricultural sector for sustainable economic development.