THE ROLE OF CENTRAL BANK OF NIGERIA C.B.N) IN AGRICULTURAL FINANCE DEVELOPMENT, PROBLEMS AND PROSPECTS
A CASE STUDY OF NIGERIA AGRICULTURAL INSURANCE COMPANY (NAIC) ENUGU
ABSTRACT
Based on historical evidence, the highest contribution to the Nigeria Economy was Agriculture at present, Agricultural Production has been deducing drastically, especially since the oil boom. This was also contributed to the neglect on this sector due to the problem the Agriculturist encountered.
            Nigeria Agriculture is characterized by the pre-prudence of small scale farming which yields the bulk of the total production. The small scale farmers have been the bedrock of our Agriculture economy and is characterized by illiteracy, small size of farm holding, little capital, unclear titled to land, low productivity and little savings. The muddle class farmers has been increasing in absolute number but is significant in terms of ration. He has large capital, he is more educated and has probably succeeded in his career before retiring into farming. He has better access to credit and information and because  this class of farmers were still insignificant in terms of contribution to Agricultural production. It is university and misleading to base Agriculture policy formation on it.
            The government in its various tiers is another of Agriculture, in Nigeria. She gets involved into physical farming as well as provision of basic infrastructure and inputs. Examples are: Agriculture Development Project, National Accelerated  Food Production Programme, Poverty Alleviation Programme, etc. The plethora of this programme is but  a pointer to the confusion regarding the role of government in Agriculture.
            Apparently, government has been inefficient and ineffective both in physical farming and in a way of encouraging agricultural finance appears to have increased the volume of Central Bank of Nigeria loans in this direction but it has not had a corresponding impact on the economy. A need to reappraise and indirect agricultural policies and strategy towards the small scale farmer is suggested as one of the basic solution. To achieve and fulfill the motive of this study, the researcher tried as much as she could to use both primary and secondary data.
TABLE OF CONTENT
CHAPTER ONE:
1.1 Background of the study                            
1.2 Statement of problem                                                         
1.3 Objective of the Study                                                       
1.4 Research Questions                                                 
1.5 Research Hypothesis                                               
1.6 Significance of the Study                                       
1.7 Scope, Limitation and Delimitations                                              
1.8 Definition of Terms                                                            
            Reference                                                                               
CHAPTER TWO:                            
2.0              Review Of Related Literature                                                           
2.1              Nigerian Agricultural Insurance Company’s                         
Relationship with any other Establishment   
2.2              Accelerating with cheaper food production                          
2.3              Reasons for low agriculture output                                        
2.4              Banking industry and development of agriculture    
2.5              Role of agricultural credit                                                      
2.6              Reasons for low participations by      
farmers in Nigerian agriculture                                                                                  
2.7              Role of agricultural insurance company                                 
2.8              Insurance and Agriculture                                                     
2.9              Summary of the Reviewed Literature                                               
Reference                                                                               
CHAPTER THREE
3.0       Research design and methodology                                        
3.1       Research design                                                                                 
3.2       Area of study                                                             
3.3       Population                                                                              
3.4       Sample and Sampling Techniques                                         
3.5       Instrument of Data Collection                                                           
3.6       Methods of Data presentation                                                           
3.7       Methods of Data Analysis                                         
Reference                                                                                           
            CHAPTER FOUR
4.0              Presentation and Analysis of data                                         
4.1       Data presentation                                                                               
4.2       Testing the Hypothesis                                                          
Reference                                                                                           
            CHAPTER FIVE
5.0              Findings, Recommendation and Conclusions                                   
5.1       Findings                                                                                             
5.2       Recommendations                                                                             
5.3       Conclusions                                                                                        
            Bibliography                                                                          
 CHAPTER ONE
1.1                          BACKGROUND OF THE STUDY
Agriculture is defined as the cultivation of land for the purpose of producing food for man, feed for animal and fiber or raw material for our industries. It is  includes the processing and marketing of crops”. In order words, it embraces all activities  involved in the primary and controlled production of plant and animals, such as fishing, forestry, farming, livestock, poultry and small scale industries connected with processing of agricultural products.
   Agriculture is one of Nigeria’s largest industry and it does only provide the food and cash crops which are consumed locally and exported to earn foreign exchange, but also employs more than 75% of the entire population, thereby generating revenue to individuals and government.
   This goes a long way to increase the ratio of our Gross National Product (GNP).
   It is important to note that the present economic predicament of Nigeria could be credited to the drastic fall in the contributions of the agricultural sector. The contribution of agricultural sector to the national economy before independence and the years period after, cannot be emphasized. During this period of per-independence and shortly after words, agricultural products dominated in Nigeria export trade, but today, these products (GNP). Agriculture contribution in the early years of independence (1963 – 1964) was 61.5% throughout the 60s. In the 1970s, it declined miserably by  2.3%. The decline may be attributed to the domination of the nations exports by oil since 1970 and  the oil sector accounted for 57:6% of total export income in 1970 and this share rose steadily, attaining an overwhelming proportion of 98% in 1981.
   This oil lead to absolute neglect in the both GDP (Gross Domestic Product) and export earnings which has been the major factor dictating the need to reactivate out agricultural products. The need for the re-activation and in effort to revamp this sector has been the reason years to it. It rose from 6% in 1970s to 22% in 1984. This increase acts as incentive and motivation to farmers, but these farmers while engaging in these agricultural ventures are exposed to a lot of problems like disease and pest attacks, fire destructions, industries pollution, machinery breakdown and other problems.
   To these problems, the farmers need some aids in solving or minimizing them.
Loan, through the Central Bank of Nigeria seems to be one of the solutions to these problems. To deal more effectively with these risks that the farmers are exposed and to encourage the growth of Agriculture Contribution towards our economy; agriculture insurance was introduced and launched in Nigeria on 15th December 1987, by the Federal Government of Nigeria. The scheme at it’s launched in Nigeria in the year has a budgetary allocation of N4.5m, N6.5m was used to set initial expenses and N35m, the initial contribution to the reserve fund. The main farming activities being covered under this scheme are crops (maize and rice) livestock (poultry and cattle). Tangible fixed assets like farm buildings and farmers, employees and dependants.
   Following the formal launching, the Nigeria Agriculture insurance Company was established by the Federal Government of Nigeria (Central Bank of Nigeria i.e their agent) to enhance and oversee the operation of the scheme and to underwrite the loans given to farmers by the Central Bank of Nigeria. The scheme was designed to benefit the small, medium and large scale farmers, either in group or as individual producers.
   In order to make the scheme a success, the Federal Government of Nigeria through the Central Bank of Nigeria subsidized the premium rate to 59% to enable subsistence farmers to participate in the scheme. This will definitely boost food production and surplus for exportation upon the efforts of the Central Bank of Nigeria to make this scheme a success, it has not been following effectively and efficient as expected, hence, this is an indicator that there has been some elements of problems debilitating it from functioning positively.
1.2                          STATEMENT OF PROBLEM
It is self incident that agriculture has been losing it’s portal role in Nigeria economy irrespective of the various programmes that  have been designed to resuscitated it. Finance has been traced to the major handicap to the typical Nigeria farmer, lack of modern farming storage facilities, making and distribution system.. Then the central Bank of Nigeria the apex bank has been mandated by the federal Government of Nigeria is find a solution to these problem.
                        Consequently, the central Bank of Nigeria through its agencies grant credit for the purpose of agriculture. But was faced with the following problems:
                        -  Lack of general awareness.
                        -  Inadequate public enlightment
                        - Mismanagement
                        - Lack of co-operation from the lending house
To minimize the high rate of default that characterized the agricultural insurance company was introduced.
- Public’ skeptical attitude toward insurance
- Lack of liquidity cash to pay the premium .
The problem is that the impact of agriculture on the economy continuously dwindle irrespective of the various efforts of the central Bank of Nigeria including the recent of introduction of Nigeria Agricultural insurance company
1.3              OBJECTIVE OF THE STUDY.
The major objective of this study is to determine appraise and identify the performance of the central Bank of Nigeria and it’ agencies including the Nigeria Agricultural Insurance company and the performance of the  central of Nigeria and Agricultural financing.
This involves.
- To determine the exact efforts of the Central Bank  of
Nigeria in agricultural financing.
- To identify the Central Bank of Nigeria agencies in
relation to Nigeria agriculture.
-To identify the problems associated with the implementation of these agencies and suggest solution so as to improve agricultural financing
-To appraise the pre and post Nigeria Agricultural Insurance company and the performance of the central Bank of Nigeria in agricultural financing.
- To  determine why agricultural pivotal position in the
     economy is still from being recovered with a view to
      recombining possible solutions.
       These objective are very important because agriculture is the bedrock of any sound-economy more especially in Nigeria context because of her natural endowments in agriculture. I believe that this is why various government have always come up with agricultural slogan  as the key to their major objectives such slogan belonging to different past government includes – operation feed the Nation Green Revolution.
1.4       RESEARCH QUESTIONS
(1)        To what extent is the establishment of Nigeria Agricultural Insurance Company (NAIC) helped in increasing Agricultural Productivity in Enugu State.
(2)        To what extent do farmer benefit from (NAIC) in the event of natural hazard which resulted to financial loss.
(3)        How does the establishment of NAIC in Enugu State enhance the level of lending of agricultural loans to the farmers by financial institution.
(4)        To what extent has the establishment of NAIC helped in evenly distribution of government financial relief packages to farmers who sustain financial loss from natural disaster?
1.5       RESEARCH HYPOTHESES
            The role of Central Bank of Nigeria in agricultural finance development will not be complete without testing the following hypotheses:
1.         Ho: There is no significant relationship between the mean perception of NAIC staff of Enugu State office and farmers in Enugu on the improvement of agricultural productivity in Enugu State since the establishment of NAIC.
            Hi:       There is significant relationship between the mean perception of NAIC staff of Enugu State office and farmers in Enugu on the improvement of agricultural productivity in Enugu State since the establishment of NAIC.
2.         Ho:       There is no significant difference between the NAIC staff of Enugu State office and farmers in Enugu State view on the benefit farmer derive from NAIC in the event of nature harzards on their farm set-up.
            Hi:       There is significant difference between the NAIC staff of Enugu State office and farmers in Enugu State view on the benefit farmers derive from NAIC in the event of Natural harzard on their farm set-up.
3.         Ho:  There is no significant difference between the NAIC staff of Enugu State office and farmers in Enugu State office and farmers in Enugu State enhance the level of lending of Agricultural loans to farmers by financial institution.
            Hi:       There is no significant difference between the NAIC staff of Enugu State office and farmers in Enugu State enhance the level of lending of agricultural loans to farmers by financial institution.
            Hi:       There is significant difference between the NAIC staff of Enugu state office and farmers in Enugu State  enhance the level of lending of Agricultural loans to farmers by financial institution.
4.         Ho:  There is no significant difference between the NAIC staff of Enugu State office and farmers in Enugu State helped in evenly distribution of financial relief packages to farmer who sustain has from natural disaster.
            Hi:  There is significant difference between the NAIC staff of Enugu State office and farmers in Enugu State `helped in evenly distribution of financial relief package to farmers who sustain has from natural disaster.
1.6       SIGNIFICANCE OF THE STUDY
                        Unless the cause of a problem is found, any attempt at solving the problem would likely be efforts in futility. But when the basic causes of a problem situation are identified, solutions would be easily found.
                        The contribution of agriculture in the nations economy in providing basic raw material for industries, food for the teeming population and to the balance of trade and payment cannot be over-emphasized.
                        Moreso, it creates employment opportunities acts as a source of revenue to the government and private sector of the economy.
                        So, in this context, since agricultural cannot be ignored, there is therefore a need to undertake this descriptive research in order to determine the true nature of it’s problems moreso in the light of agricultural financing.
                        The research work when complete will be of use to the following;
-               The farmers and agriculturists
-               Insurance companies (agricultural insurance companies)
-               Students in the department of banking and insurance.
-               The Central Bank of Nigeria (Federal government)
-               Subsequent researchers in the topics
1.8       DEFINITION OF TERMS
            DEVELOPMENT =>                       This means a process of sustained
increased in both per capital income and total income accompanied by structural modification of the socio economic and political environment.
            FINANCIAL INSTITUTION=>These are institutions, either
private or public which to channel loanable funds from savers to borrowers.                   
AGRICULTURE=>                         In this research paper, the word “Agriculture” is used in its common parlance which includes production, research and training in fields of crops, forestory fishing and livestock.             
SMALL SCALE FARMERS=>this is the small size of farm holding; literacy and ignorance; little to capital, lack of tangible assist and clear title to land; how level of productivity; low income; generally vural milieu.
FARMERS=>                                   The term farmer” have been used in a generic sence to cover the spectrum of agricultural production.