Matching Credit with Season: An Issue for Non Performing Agricultural Loans in Nigeria

Abstract

This paper empirically investigates the performance of Nigeria's agricultural credit policies with a view to unearthing the factors responsible for the poor loan performance. The findings reveal that although Nigeria's agricultural sector is abysmally underfunded with an unproductive federal budget structure that have been detrimental to agricultural productivity, the basic factor responsible for poor loan performance has been the failure to match credit with seasons. From the analysis of loans and disbursement flow to agricultural sector, it was discovered that loan are paid to farmers with utter disregard to the seasons. Evidently, the mismatch of credit disbursement with seasons attenuated growth and productivity of agriculture in Nigeria, resulting in poor loan performance. We recommend the adoption of the seasonality model, an innovative strategy, which is capable of solving the problem of default in agricultural financing and as such aiding the process of enhanced agricultural productivity and national development.