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THE ROLES OF COMMERCIAL BANKS IN FINANCE SMALL SCALE AGRICULTURAL

ABSTRACT

It has because very imperative to examine the role of commercial Bank in financing of A agricultural projects PLC, (1999 – 2003), is s topic so crucial that interested parties in the work many. It is very vital considering the role of commercial banks in general and first Bank in particular play in financing of Agricultural. Project in Enugu state, in sustaining the Economy. This creditable role being played by the above bank in sustaining the economy of Enugu state and the position of agriculture in the building of a venture find a self reliant nation attracted the attention of the researcher. The instrument with which the Central Bank of Nigeria Central the commercial Banks in general and first Bank in particular in terms of Agricultural loans were examined. With credit guidelines which comes out every year, Central Bank of Nigeria specifies, the minimum percentage of loan of agricultural sectors. Secondarily, the Federal Government of Nigeria and the Central Bank of Nigeria established the Agricultural credit guarantee the value fund by which the farmers who receive loan under it are guaranteed by the Central Bank of Nigeria. The liability of CBN is the case of default is up to 75%. The study tried to find out whether the decline in agricultural output within the state has link with the absence of credit facility made available to formers by commercial banks in general and first bank in particular in financing of Agricultural projects in Enugu state, in doing so first Bank of Nigeria (FBN) PLC with Bank office and area offices within Enugu state were selected for studies, and because of size three local Government were also selected for study and the include Enugu East and Enugu South.. Cluster sampling was used to selected farmers on which questionnaire were administered.  Also used in collecting data was interview method because there was some farmer who were not very literate. The data collected was used testing the two hypotheses for the topic. The hypotheses included that carry out feasibility study to Agricultural farmers do not have any effect on commercial Banks in general and Bank in particular in financing of agricultural project in Enugu state, and commercial Banks aim general and first Bank in particular do not respond adequately to farmers in financing needs of agricultural project in Enugu state. In testing the above hypothesis, chi – square test was used. The test concluded that carrying out feasibility study to Agricultural farmers in Enugu state do not have any effect. It was also concluded that commercial Bank in General and first Bank in particular do not respond adequately to farmers in financing need of agricultural projects in Enugu state. Other mirror issues in the researcher questions in the project were weighted to percentages. In conclusion, commercial banks in general and first Bank in particular should be more encourage to assist agricultural sector and appropriate staff expansion recommended for effective supervision to avoid both loan default and diversion in Enugu state.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO STUDY 

In the immediate past decade and this present decade, there have been seminars, conferences, articles, Journals and various publications by both local, national and International Organizations on the sharp decline in Agricultural production on these various programmes, some of these workshops, conferences and seminars include the followings:
- The 13th Annual workshop of the South – West Research Extension

Farmers impute Linkage system (REFILS) helped at the Institute of Agricultural Research and Training (I.A.R.T), Moor plantation Ibadan in March 2000 with topic “Adaptive Research and Method in Agriculture”. 
- An Annual conference Organized by Agricultural Extension society of Nigeria (AESON) held at university of Ibadan Conference Society of Nigeria Centre, Ibadan on 10 – 12 April, 2000. 

They emphases on the need to promote agricultural production to reduce the unguided population explosion which is at geometrical progression (G.P) while Agricultural production was only growing in an arithmetical progression. These seminars, workshops, conferences also reminded the populace world wide of the impending danger posed by the continuous deforestation practices of our forest reserve, bush burning overyrazury, continuos coming and other environment gradation hazards.  They panted out little or on concerted effort are made in replacing the deforested areas. They called on the need to embark on a national forestation scheme and forest conservation

In Nigeria, there bad been various campaigns for to inhabitants nationally to plant at least one tree crop in his vicinity annually (tree planting compaign) All these would have been uncalled for but for the indispensable role played by agriculture in Nigeria economy, justly this project work, Agriculture sector in developing and under – developed countries. It provides foods required for the teeming population in both the rural land populace. It also provides raw materials for our agricultural industries like Cotton to our textile industries. 
Agriculture provides employment for about 60% of the labour force in developing countries. Agriculture also provides incomes to individuals, states, and the nation, to the peasant farmers and traders aluce. It provides money as income and means of live holds to the farmer who sells this farm wares to the populace. To the states, like Enugu state the cashew plantation at Ohhe not only provides raw materials to industries but also provide income to the state government and to the nation, it provides a means of export, thereby learning foreign exchange and consequently reducing the chorus balance of payment deficit prevalent in these region. 

In 1969, Agriculture contributed 31% the cross Dmester product (GDP) in sierra Leone, 1957, it contributed over 61% to GDP in Nigeria and in the year 2001, proceeds from sales of grain (Agricultural product) in Nigeria amount to over N2.5N Billion (CBN Bullion Jan / March 2001) The percentage contribution of Agricultural sector to the national has seen declining since when the petroleum sector started contributing heavily to the national income. Presently, agriculture has assured a wider scope as against those days when agriculture was viewed as a narrow feed which includes the propagation of seeds and crops and the rearing of animals for man use. This does not fully inculcate all the relevant aspect of agriculture. Some agriculture in of seeds and crop, include souring and buying of farm input like seedlings machinery’s etc and the selling of its output (agricultural marketing) and the use and provision of credit in agricultural – financing). This later view is more prevalent now especially among the literate populace. The use and provision of agricultural credit will equally assist us in appreciating the role of commercial banks in financing agricultural project in Emugu state their problems and prospects. This forms the course of this project.

1.2 STATEMENT OF THE PROBLEM

The major concern of this study us to know from the lender (First Banks as the Commercial Bank) and the recount (Farmers and Agriculturists) loan effectively agricultural project are Financed in Enugu State a result of the donnreeening and indispensable role of commercial banks. Since the establishment of the bank in 1894, they has been carry out financial assistance to agriculturist.  Farmers encounter various difficulties when trying to get financial aids from commercial banks - some of these difficulties are as follows: 

(i) Agriculturist / Farmers do not get financing aids such as Bank Loans / credit when they need it. 

(ii) Commercial banks granting loan to farmers due to adequate collateral for such loan . 

(iii) Illiteracy among the farmers also crenate a very difficulties because of this farmer do not o to banks to receiving advisory services which might help then to increase their productivity.

1.3 PURPOSE / OBJECTIVE OF THE STUDY 

1. To find out whether carrying out feasibility studies for agricultural project is one the roles commercial banks plays in the financing of Agricultural projects in Enugu state.. 

2. To investigate whether provision of credit facilities to farmers is one of the first banks play in financing of agricultural projects in Enugu state. 

3. To find out whether opportunity of safe custody of fund is one of the roles which First Banks play in financing of Agricultural projects in Enugu stare. 

4. To find out whether provision of financial lease to farmers in Enugu state is one of the roles First Banks play in financing of agriculturist project in Enugu state. 

5. To find out whether rendering advisory services to farmer is a role which First Banks plays in financing Agricultural project in Enugu state from 1999 –2003.

1.4 RESEARCH QUESTIONS 

1. Is carrying out feasibility studies for Agricultural project one of the roles of commercial banks play in financing agricultural projects in Enugu state ? 

2. Is provision of credit faculties to farmers one of the roles of the First Bank play in financing of Agricultural project in Enugu state ? 

3. Is commercial banks in general and first bank in particular save funds realize by farmers in Enugu state. 

4. Is provision of financial lease to farmers in Enugu state one of the roles First bank play in financing of agricultural project in Enugu state. 

5. Is rendering of industry services to farmers in Enugu state one of the which First bank in particular and commercial bank in general play in financing of agricultural projects in Enugu state 1999 –2003.

1.5 RESEARCH HYPOTHESIS 

H0: Absence of feasibility study do not affects the farmers chance of securing loan in Enugu state. 

Hi: Absence of feasibility study affects the farmers chance of securing loan in Enugu state. 

H0: First bank in particular commercial bank in general do not respond adequately to the financial needs of agricultural projects in Enugu states. 

Hi: First bank in particular and commercial banks general do respond adequately to the financial needs of agricultural projects in Enugu state..

1.6 SIGNIFICANCE OF STUDY 

The study will benefit a lot of lot of people due to the astronomical population growth presently with out a correspondent growth in agricultural productivity to feed for the growth in population, especially in the developing countries the people who benefit more from this study are the national, state government especially Enugu state the commercial banks with emphases on First bank, the farmers the renders and prospective future researcher on this topic. 

THE GOVERNMENT :The federal government stands to gain from this study by understanding the impact of the various monetary places on the effective running of commercial banks in relation to loan granted to the farmers. The state government especially Enugu state, in th same vein, stands the extent and effect on commercial bank lending policies in relation to farmers in the state and the various ways they can help in amehoreting the plight of farmers in elation to securing loans and consequent increase in productivity in the state. 

THE COMMERCIAL BANK: This commercial bank with great emphases on First bank, it will enable them to know the most suitable loan to be issue to different categories of farmers to reduce the changes of bad debt arising from non – repayment of loans granted to farmers, the type of incentive necessary to reduce non – repayment record, recorded on farmers part and on the need to recruit more agricultural credit officers do as to bridge the gap create by farmers knowledge of banking activities. 

FARMERS: On the part of farmers, it will enlighten the agricultural sector, the collateral expected of them and the repayment period to the prospective researcher, it will serves as a fertile ground to update and expand this study. 

READERS: To the reader, it will help them appreciate and evaluate the efforts the Federal and their arms of government in boasting agricultural productivity. It will also enable them to assess how effective and efficient the loan responding to agricultural financing. In summary, the findings may help in redirect and reorienting our farmers on the right direction as to loan available and requirement.

1.7. SCOPE , LIMITATION AND DELIMITATION OF STUDY

The scope of this study were limited by the various factors, same of which are classified as secret nature of banking industry, inadequate finance , time constraint the magnitude of illiterate farmers, the dispersed nature of their settlement and the unwillingness on the part of respondents in sacrificing their time.Under limitation of this study classified nature of banking industry; since banking activities are mostly not assessable to members of public, most of the required data for this project could not be reached. The shortage of finances experience by the researcher especially in the present economic recession prevented the research from reaching out to as many respondents and First Bank as possibly. 

Time constraint also militated against this project due to the 2003 /2004 academic year calendar, the short period therein was inadequate time for the academic work which equally affected this project due to this time constraint some text books and journals which would have added space to this project were non – used.  Under the deli9mation of the study, the study is on the role of commercial banks in financing of agricultural project in Enugu state. The study is such that it concern the farmers as the agriculturist and the bank as financial institutions. The researcher would have loved studying all other banks and states in the same category but due to some constraining factors, he has limited on First Bank of Nigeria PLC

1.8 DEFINITIONS FO TERMS 

1. FINANCE: This is the efficient sorcery, application and management of fund to maximize wealth. Finance can also be explained as the possession of funds when it is needed for investment. This explanation indicates that finance does not just mean the usage of fund but as well included the souring required funds at the right time and sharing of return (Iloh; 2015)

2. AFGRICULTURE : This is the scientific propagation of plant and rearing of amounts which is meant for scouring and application of fund ( Credit Facilities to make it available for use) and the marketing of its out put (Agricultural marketing) for man uses . 

3. COMMERCIAL BANKS: These are those banks concerned with lending of money to businessmen, firms co-operation etc. for a short periods on the strength of liquid securities, they also play the role of safe custody of find and the valuable items. 

4. PROJECT : This is plan when making a research work, or tools that are necessary for work making which involves the investment of scare human and material resource which can be quantitative and qualitatively analyzed with a primary objectives of assessing the economic returns which accrue to that venture inflows.

REFERENCES 

Emado A. B. C. (2015); Comprehensive Agricultural Science for West Africa Senior Secondary Schools Onitsha; De – diamond Publishers Revised Edition PP 39 - 48 

Oriji John (2016); Banking Operations in Nigeria, Enugu, Je - Rohi Publishers PP 2 

Ukemenam C. O. (2011); Practice of Banking for students and professionals, Enugu Otek Publishers PP . 6 

Udeh S.O (2010); Business Finance, Enugu Malik Enterprises Nigeria PP. 186 – 188

Odike J. C. (2011) , Managerial Economics Enugu, JTC Publishers PP 303 – 306 

First Bank (2012); Business and Economic Report PP 10 
Orjih John (2010), Portfolio Management, Enugu Splashmedia Organization PP. 15

CBN Bullion (2011) Vol 25 N0 1 Jan / March 
Iloh J.V.C (2015), Business Finance (Issues and Application), Enugu, Glance venture PP . 2 .

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