AN INVESTIGATION ON THE PERFORMANCE OF NIGERIA AGRICULTURAL COOPERATIVE AND RURAL DEVELOPMENT BANK (NACRDB) IN AGRICULTURAL CREDIT DELIVERY

Agriculture involves the cultivation of land raising and rearing of animal for the purpose of production of food for man, feed for animal and raw materials for industries. It is undisputable that agriculture is the bedrock of any developing nation as it provides the food and fibre requirement of the teeming population. Agricultural development is one of the crucial requirements for overall economic growth. Although the oil sector has now dominated the Nigeria economy, contributing up to 80% of government revenue and more than 10% of the country’s foreign exchange. It is still the agricultural sector that is sustaining the majority (70-75%) of the country population estimated of over 84 million in 1980 (Olatunbode, 2010). The low level contribution of agriculture to the Nigerian economy over the years has been known to be the major reasons why huge amount of import, bills are incurred by the government on food/fibre importation since the discovery of crude oil in the 70’s.
 
One characteristics of agriculture is that most of its product are seasonal and are susceptible to deterioration in storage, the rating of agriculture production in Nigeria make it a rather difficult sector for commercial bank lending. For exchange, a large number of the farmer are not literate and hence are not familiar with bank procedure. Also, then farmer often produce enough food to feed their families with little left for the market. (Ojo, et al 2011).
Despite the huddle faced by the farmers they still produce food and raw materials for the nation. The development of agriculture involved the adoption of new and more efficient technologies by farmers, the new technologies includes the improve seed, breeds, agrochemical, as well as farm implement. These technologies must be purchased by only a few of the small holder farmer in Nigeria have the financial resources to make such purchase (Okpeku, 2012). Yet the estimated is more than 50% Nigeria food supply is produced by the rural small-scale farmers with farm size ranging from 0.1-0.2 hectares (Olayide, 2010). Under these circumstances therefore lack of credit poses a serious impediment to agricultural development hence the economic development of Nigeria.
The research work is intended to assess the performance of Nigeria agriculture cooperative and rural development bank (NASCRDB) in meeting the credit need of farmer. Reluctance of the commercial bank and merchant bank to extend credit facilities to the agricultural venture and the low rate(s) of return that characterize agricultural business undertaking informed the laudable decision of the federal government of Nigeria to establish a national agricultural bank, the Nigeria agriculture and cooperative bank (NACB) now the (NACRDB) was incorporated in 1972 and commenced operation in 1973 as an apex development financing institution charge with the singular responsibility of providing credit facilities for agricultural and rural development in the country.
The birth of Nigeria’s agricultural cooperative and rural development bank (NACRDB) limited as a single largest development finance institution in Nigeria followed the successful merging of the former people bank of Nigeria (PBN) the defunct Nigeria agricultural and cooperative bank (NACB) limited and risk assets of the family economic advancement programme (FEAP) in October, 2000. NACRDB is dedicated primarily to agricultural financing as well as micro-financing of small and medium scale enterprise. The bank is a registered limited liability company that is wholly owned by the government of the Federal Republic of Nigeria with the share capital fully subscribed by the federal ministry of finance (60%) and the central bank of Nigeria 40%) with its branches scattered all over the country including Edo State with six (6) bond office namely South-South bond office at Port-Harcourt, North East bond office at Bauchi, North West bond office at Kano and North Central bon office at Abuja. However, the bank performs this all important function of credit delivery is what this study is therefore set out to assess.
MAIN OBJECTIVE AND FUNCTION OF NIGERIA’S AGRICULTURAL COOPERATIVE AND RURAL DEVELOPMENT BANK (NACRDB)
As the development financial institution Nigeria agricultural cooperative and rural development bank (NACRDB) limited was established to deliver credit to the agricultural sector of the Nigeria economy having the following specific objective as the central forces.
Promotion of agricultural production and rural development
Assisting in the improvement of the income and quality of life of the Nigeria rural population.
Contribution to the overall growth and development of the Nigeria economy
Promotion of capacity building through the provision of received training and advisory services.
Encouraging the formation of cooperative societies at all levels.
Thus the function of the bank to achieve the above objective are;
 
The provision of loan to industrial farmers, cooperative organization, limited liability companies
Financing direct investment in the equity capital of major agricultural and agro-allied industrial venture
Providing guarantee for viable agricultural and agro-allied venture to enable the rate raise finance either locally or internationally.
Assisting in improving the income and welfare of farmer by promoting rural development.   
Increasing the nation output of food and cash crop to meet the need of a rapidly increase population.
Financing of all form of agriculture project which includes fishery, cattle, poultry, rabbitry, forestry and timber production horticulture, arable crops, and free crops.
Provision of finance for the marketing of agricultural produce locally and for export.
Financing of agro-allied project including tractor, living operation agro-processing and storage (NACRDB, 2010).
NIGERIA’S AGRICULTURAL COOPERATIVE AND RURAL DEVELOPMENT BANK OPERATIONAL SCHEME
The bank operates a supervised loan delivery system through the following scheme;
On-lending: Under theses scheme lending is made to established institution against repayment guarantee for on-lending to small scale farmer. The on-lending institution includes state government cooperative organization, state agriculture credit cooperation agricultural development project and river basin and rural development authorities.
Micro-credit: The scheme is designed to directly reach small farmer who produce the bulk of our food, this step was taken in order to meet the increasing credit demand of the small scale farmer who produce 90% of the total output of food and fibre of the country, the security requirement such as certificate of occupancy of project land and other security requirement applicable to the micro credit are waived for turnover under micro credit scheme. What is require is only that the farmers  satisfies operational staff that he is largely a full farmer with a farmland belong to him or his family of what he has permission to use it. Also that he is residence in a village where farm land is located and can produce two guarantors to guarantee the loan is not to exceed N250, 000.00.
Macro-credit: This loan scheme is specifically designed to meet the credit need of the medium and large scale farm, under the scheme, the bank deal directly with individual farmer and organization without going through on-lending intermediaries the loan is from N250, 000.00 and above (NACRDB, 2010).
LENDING RATE
The bank interest rate regime on is generally concessionary and discriminatory in favour of small farmer and trader to who the bank buck of loanable fund is directed.
Micro-credit – 80% per annum
Macro credit
Agriculture production – 16.5% (except cotton production) per annum      
Agro-processing – 17.5% per annum.
Marketing – 18.5% per annum
Cotton production – 70% per annum 
Special project – as prescribed and negotiated with donor agencies and state holder;
Interest on micro credit is calculated on simple basis.
The listed rate are subjected to large from time to time (NACRDB, 2010)
 
The major problem militating against the accelerated growth and development of the agriculture sector generally is the apparent lack and inadequacy of available capital for agricultural production and distribution by the rural farmers. In recognition of the severity of this problem, the federal  government of Nigeria established the (NACRDB) former (NACB, PBN and FEAP). In 2000 in place of NACB for better service to the farmer, though the bank and its former level has been in operation for over three decade the problem level inadequate capital is still paramount among the rural farmer, this raise such question as what could be responsible for this situation. How effective is the performance of the bank in delivery credit for farmer. Are farmers not making use of this facility of is the bank serving other at the expenses of farmer? Does the bank delay the approval of loan request thereby building up queues? These and some other are the questions that study is set out to answer.
 
The main objective is to assess the performance of NACRDB in agricultural credit delivery in Edo State. The specific objectives are;
To identify the different loan scheme available to the farmers.
To identify the number of farmer that participate in the scheme per time period.
To identify the category/type of customer served by the bank.
To identify the presence of a queue and examine the bank service rate their arrival rate and waiting time.
To determined the traffic intensity in order to access the level of effectiveness of the performance of the bank.
To identify the problem militating against the performance of the bank in agricultural credit delivery.
 
The desire of any nation is to be self-reliant in food production for its citizen. One sort way of achieving this is adequate funding of the agricultural sector through the provision of loans to the farmers.
Much work has been done on the different sources of loan to farmers but the assessment of the performance of such sources does not seem to have been done. This needs to be done for such credit sources to reorganize their strategy, the result of the study would be invaluable to the bank, farmers and policy makers.