Boosting the Financing of Agriculture in Nigeria: The Capital Market Option

Abstract

The recent global and economic crisis has led to a renewed interest and developmental focus on agriculture.  In the Nigerian context, this economic upheaval have lead to a decline in crude oil earnings and has once again brought to the front burner the urgent need to diversify the economy and the revenue base of the country. Diversification has long been identified as a sine qua non for accelerated development of the economy with agriculture playing a competitive role.  However, a major challenge facing many developing countries, especially in Africa, is devising appropriate development strategies that will capture the financial services requirements of farmers who constitute about 70 percent of the population. In fairness, the Federal Government of Nigeria has instituted various policies to achieve this aim, including a commercial bill financing scheme; regional commodity boards (later called national commodity boards); an export financing and rediscount facility (1987); the Nigerian Agricultural Cooperative and Rural Development Bank Ltd; Community Banks, People’s Bank; the Agricultural Credit Guarantee Scheme Fund (ACGSF); and the Small and Medium Enterprises Equity Investment Scheme among others. In retrospect, these policies have impacted minimally in improving agricultural production in Nigeria.  This paper therefore takes a cursory look at agricultural financing in Nigeria, presenting the capital market source of funding as a viable option for financing agriculture by all tiers of government in Nigeria. The capital market option if pursued will provide the much needed long term financing for accelerated agricultural development.

Keywords: Agriculture Financing, Capital Market, Economic Development