Impact Assessment of the Agricultural Credit Guarantee Scheme Fund on Agricultural Sector Growth

Abstract

The Agricultural Credit Guarantee Scheme Fund was established in 1978 by the military federal government in 1977 to incentivize banks to increase lending to the agricultural sector. However, the lack of repayment of previously lent loans has led to a shortage in the distribution of loans. The primary objective is to analyze the effectiveness of the CBN agricultural intervention program, specifically the Agricultural Credit Guarantee Scheme Fund, over 30 years from 1991 to 2020. Using the Ordinary Least Squares (OLS) method, a linear model was employed to examine the relationship between dependent and explanatory variables. The study’s findings reveal that the coefficient of the Agricultural Credit Guarantee Scheme Fund is negative, at the 5% level. This could indicate that beneficiaries in the sector are not making full use of the fund. The report proposes that banks focus solely on agricultural lending to encourage agricultural growth and ensure that loans are allocated toward their intended agricultural purposes to avoid money misuse.