Role Of Financial Institutions In Agricultural Development

INTRODUCTION
Background of the Study
The Nigerian Agricultural Co-operative and Rural Development Bank (NACRDB) is a development finance institution, which was specifically set up to deliver credit to the agricultural sector of the economy. This is carried out through the provision of loans to individual farmers, co-operative organization, limited liability companies, state and federal government agencies. In addition, the bank provides financing by direct investment in the equity capital of major agricultural and agro-allied ventures, to enables them raise fund/capital either locally or from abroad. The activities of the bank are geared toward assisting in improving the income and welfare of farmers, promoting rural development as well as increasing the nations output of food and cash crop to meet the needs of a rapidly increasing population (NACRDB 1989). In 1981, the NACRDB small holder famer loan scheme (SHLS) was initiated on a pilot basis. By 1984, it was clear that the pilot scheme was a success in term of both fund utilization by farmers for farming and loan recovery. As a result of the economic hardship in which the country found itself in 1984, and which led to large scale retrenchments in both the public and private sectors of the economy, the bank widened the scope of it direct small holder scheme to take care of retrenched workers who wanted to take up farming an occupation further to this, the widening of the scope also took care of those still in employment in both the public and private sectors but who were interested in farming (Ajakniye, 1989). During this period, the National Livestock Production Loan Scheme (NLPLS) was also established for the purpose of promoting and encouraging livestock production in the country. The (NLPLS) was open to all farmer offered a variety of livestock production models/option suitable for 39 different and varying ecological zones of Nigeria, such livestock enterprise model include pastoral farming, sheep fattening, cattle fattening, poultry layer in unit of 200 cattle-breeding unit, grazing reserve, pig fattening, poultry boiler in unit of 200, and goat breeding unit.
However, to qualify for a loan, NACB had laid down criteria which an applicant must satisfy before a loan was granted by the selection committee.
The criteria were that the farmer must:
i. Be a full time farmer (that is, his sole means of income is from his farm).
ii. Be credit worthy (that is, not being involved in any other credit scheme or not having record of bad debt (owes money) and not avoiding repayment);
iii. Have some livestock experience, but not essential.
iv. Provide facilities (that is, a suitable yard for fatterning as well as labour).
v. Have grazing land and be able to provide crop residues;
vi. Have access to water (that is, a well or stand pipe in the case of a village water scheme);
vii. Be able to provide 3 loan guarantors;
viii. Be able to provide simple water and feed facilities;
ix. Be able to provide a cash contribution of not less than 10% of the loan as required in cash or kind for the propose production model/option.
In view of the above criteria, a preliminary suitability assessment of an applicant would be carried out by extension workers before a detailed inspection of the farm could be made by NACB/NLPS officers, such an assessment was expected to help in avoiding time wastage and unnecessary expenses on obvious non-qualified farmers on the basis of some of the above stated criteria/conditions.
One other important condition, which the farmer must fulfill, was the signing of a loan agreement form, which was legally binding. The content of the agreement form included:-
a. Purchasing of approved stock from approved sources;
b. Possession and/or readiness to acquire good livestock management standards;
c. Purchasing of standard feeds from approved source;
d. The sale of stock and repayment of loan within the stipulated period etc. Any farmer that refused to comply with the loan agreement condition was not eligible to loan renewal. Legal action were taken against loan repayment defaulters at Magistrate Court (Ajakaiye, 1989). Between 1979, all the operational activities of the NACB such as loan approval and disbursement were done at Kaduna, headquarters. By 1980, the operations of the bank become decentralized such that the regional offices could process, approve and disburse loans to their clientele.
The decentralization was informed by the recognition of the fact, it would be too costly and virtually impossible for the millions of the agency’s customers, especially, rural farmers, to travel long distances before obtaining agricultural loans (Ajakaya 1989). As a result of the decentralization the National Livestock Small Holder Loan Scheme (NLSHLS) came into existence in Nsukka agricultural zone in 1987 with a take-off of 12 beneficiaries, drawn from a few rural communities within the zone. By 2003 the NLSHLS had spread to many rural communities (Nru, Ameze, Nguru, Ovoko, Ibagwa Aka, Ikakpu Awka, Ogurute, Unadu, Alor-Uno, Obollo Afor, Adani, Achi, Umuogbu Agu, Aji, Orba, Umuopu etc) with a tremendous increase in the number of the beneficiaries from 12 to 246. Loans ranging from N3000 to N30,000 at 15% interest vote were given to different farmer on the basis of the type of animal possessed. The scheme was being covered by the Nigeria Agricultural Insurance Company (NAIC). The scheme is currently operating under an Umbrella called the Nigerian Agricultural co-operative and Rural Development Bank (NACRDB) following the merger of the NACB, people Bank of Nigeria (PBN) and Family Economic Advancement Programme (FEAP) by the federal government in 2009 with a take-off grant of N11 billion (federal government of Nigeria 2000) After 10 years of existence of the scheme and involvement of the beneficiaries, certain relevant attitudinal and impact evaluation questions became pertinent.

Statement of Problem
The number one problem among these thousands of farmers is that, they are ignorant of this wonderful financial lending institution as bodies that saddled with responsibility to providing them with loans. Again those who have some knowledge are not convinced to log on to this beautiful scheme out of fear of it working out. The financial lending institutions fail in their obligation in the disbursement of funds to these peasant farmers because of the perceived high default rates among farmers. Consequently, the aim of these institutions that give funds seem to be defeated as rural farmers are still at the very poor state of that they were. This thesis is born out of this ugly situation.

Purpose of the Study
To assess the impact of Nigeria Agricultural co-operative and Rural Development bank (NACRDB). Enugu Zonal Headquarter on socio-economic status of the rural farmers; and to evaluate the National-Livestock small holder loans scheme under the NACRDB among farmer in Enugu North. Again, to evaluate the NLSHLS among rural farmers in Nsukka agricultural zone of Enugu State, as well as re-address the constrain of farmers access to credit in the financial institutions.

Significance of the Study
The thesis has to a large extent provided the way forward for all the rural farmer dwellers. As it analysis how any farmer both large and small scale can be a beneficiary in the scheme, the requirements for obtaining loans as well as the small interest rate. The farmers were made to know that the loan givers help them in the feasibility studies to ensure good result. Professionals in Agriculture are consulted for the farmers free of charge.
Research Questions
i. What is the attitude of the rural dwellers towards the scheme? It seems they are ignorant of the scheme.
ii. What is the status of loan repayment by the beneficiaries? Some of the bank expect repayment with interest after one to two years.
iii. Has the scheme made any meaningful impact on the socio-economic life of the beneficiaries? The answer was yes. Those who has the courage to go for the loan made it to a reasonable extent.

1.6 Scope/Delimitation of the Study
This study cannot clam to be all embracing due to time and money constraint. However, this work actually gives an insight on the challenges rural farmers in Enugu face, as well as solutions were prepared.

Definitions of Terms
Attempt is made to define operative terms used in this work:
i. Financial Institution: An institution that provide financial service for its clients or members.
ii. Co-operative and Rural Development Bank: This organization is having the obligation of lending money to rural farmers.
iii. Beneficiary: In the broadest sense it is a natural person or other legal entity who receive money or other benefit from a benefactor.
iv. Loan: An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money.
v. Livestock: This refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and abor.