Diversification of Nigerian Agricultural Credit and Rural Development Bank s Credit for Agricultural Production: A Sub-Sectoral Analysis

Agricultural credit plays a crucial role in economic development and the process of socio-economic transformation. This study assessed the diversification of credit granted to farmers by Nigerian Agricultural Credit and Rural Development Bank (NAC and RDB). Data obtained from NAC and sRDB, covering the period 1981-2006 were analysed using descriptive statistics, Analysis of Variance (ANOVA) and Least Significant Difference (LSD) techniques. Results showed that the crop sub-sector had more projects funded than the livestock and services sub-sectors despite having fewer enterprises than the former and about the same as the latter. The number of funded projects, volume of credit approved and disbursed, volume of credit repaid and volume of credit outstanding were found to be significantly different (p<0.01) for the sub-sectors during the period under study. Average of 47 projects for three enterprises was funded in the sub-sector while only 6 projects were funded for the seven enterprises in the livestock sub-sector. The number of projects funded for the livestock sub-sector was relatively stable over time (1.46 variability) than the crop and services sub-sector (2.63 and 2.87 variability, respectively). However, the crop sub-sector fared better than other sub-sectors by having a higher rate of repayment (35.01%) and lower rate of outstanding balance (64.99%). The loan profile of the bank could be said to have paid much more attention to the crop sub-sector probably due to repayment performance by the sub-sector, however better attention need be paid to diversification of credit disbursement for agricultural projects to boost rural prosperity.