Agricultural Financing and Unemployment Rate in Nigeria: A Cointegration Approach

Abstract

In Nigeria, the level of agricultural productivity and farmers’ income have been affected by inadequate financing, which invariably discourages job creation and increases unemployment rate. Therefore, the study examines the impact of agricultural financing on unemployment rate in Nigeria, using time series data collected from the Central Bank of Nigeria (CBN) and the World Bank database from 1981 to 2018. Using Johansen’s cointegration, Error Correction Method (ECM), and Granger causality analytical techniques, our findings show that AGRIC_GDP, AGRICL_TL, GR, LR, and RUTP have a long-run relationship with UNEMPR and are statistically significant. Also, the ECM of about 57%, which is statistically significant, provides an indication of a satisfactory speed of adjustment and translates that about 57 percent of the errors are corrected in each period. The study recommends among others that government policy on agricultural credit should place more emphasis on strengthening banks’ commitment.