Impact of Bank Loans on Agricultural Productivity in Nigeria (1999–2020)

Abstract

This study investigates the impact of bank loans on agricultural productivity in Nigeria, using the agricultural sector's contribution to Gross Domestic Product (GDP) as a proxy for productivity. Spanning the period from 1999 to 2020, the research employs descriptive statistics, trend analysis, and simple linear regression to ascertain the relationship between total bank loans to the agricultural sector and its impact on national economic growth. Findings from the descriptive and trend analyses reveal a steady increase in bank loans to agriculture — rising from ₦43.06 billion in 1999 to ₦1.11 trillion in 2020 — while the sector's GDP contribution steadily declined from 32.9% to 21.5% within the same period. The regression analysis further indicates a negative and statistically insignificant relationship between bank loans and agricultural GDP contribution (β = -6.144, p = 0.282), suggesting that increased financing alone has not significantly impacted agricultural productivity in Nigeria. The study concludes that although financial support is vital, it is insufficient on its own to drive agricultural sector growth. It recommends a holistic financing framework integrating agricultural credit with infrastructure development, mechanization, extension services, and market linkages. It further proposes a statutory agricultural credit quota for banks, reduced interest rates on agricultural loans, and improved post-loan monitoring systems.