The research work on “The Problems and Prospects of Lending to Small Scale Agricultural Producers in Bank of Agriculture. For the research work to be adequately understood, the researcher introduced the subject matter highlighting the statement of general problem. This project also touched on the research objectives, scope of study and significance of the study, the research went further to review related literatures on the subject matter. Due to time constraints, the researcher has only highlighted the major aspects of the agricultural credit schemes and repayment of loans. In a way it could still provide for an input to deeper analysis of the subject matter in this part of the Bank (B.O.A) and other in the commercial process of banks in general in carrying out this work. However, this dissertation has been grouped into five chapters.


TITLE PAGE          -           -           -           -           -           -           -           -           -           i

DECLARATION     -           -           -           -           -           -           -           -           -           ii

APPROVAL PAGE            -           -           -           -           -           -           -           -           -           iii

DEDICATION         -           -           -           -           -           -           -           -           -           iv

ACKNOWLEDGEMENT -           -           -           -           -           -           -           -           v

ABSTRACT -           -           -           -           -           -           -           -           -           -           vi

TABLE OF CONTENTS  -           -           -           -           -           -           -           -           viii



1.1       BACKGROUND OF THE STUDY          -           -           -           -           -           1

1.2       STATEMENT OF THE PROBLEM      -           -           -           -           -           7

1.3       OBJECTIVES OF THE STUDY -           -           -           -           -           -           8

1.4       RESEARCH QUESTIONS          -           -           -           -           -           -           8

1.5       SIGNIFICANCE OF THE STUDY        -           -           -           -           -           9

1.6       SCOPE OF THE STUDY  -           -           -           -           -           -           -           10

1.7       LIMITATION OF THE STUDY  -           -           -           -           -           -           11


2.0         LITERATURE REVIEW         -         -         -         -         -         -         12

2.1          ROLE OF CREDIT IN AGRICULTURAL DEVELOPMENT        -           13

2.2       CHANNELS AVAILABLE FOR FINANCING TO SMALL SCALE FARMERS IN NIGERIA            -           -           -           -           -           -           -           14

2.3       LOAN PROCEDURES IN BANK OF AGRICULTURE       -           -           16

2.4       SMALL SCALE FARMERS IN NIGERIA      -           -           -           -           18

2.5       PROBLEMS IN ACCESSING AND REPAYMENT OF LOANS BY SMALL SCALE FARMERS   -           -           -           -           -           -           20




3.0       INTRODUCTION  -           -           -           -           -           -           -           -           26

3.1       RESEARCH DESIGN       -           -           -           -           -           -           -           26

3.2       AREA OF STUDY  -           -           -           -           -           -           -           -           27

3.3       POPULATION OF THE STUDY            -           -           -           -           -           27

3.4       SAMPLE SIZE AND SAMPLING TECHNIQUE      -           -           -           27

3.5       RESEARCH INSTRUMENT USED     -           -           -           -           -           27

3.6       AMDINISTRATION OF THE INSTRUMENT           -           -           -           28

3.7       TECHNIQUES USED FOR DATA ANALYSIS          -           -           -           28



4.1       INTRODUCTION  -           -           -           -           -           -           -           -           29

4.2       DATA PRESENTATION -           -           -           -           -           -           -           29

4.3       DATA ANALYSIS  -           -           -           -           -           -           -           -           30

4.4       ANALYSIS OF DATA COLLECTION  -           -           -           -           -           36

4.5       SUMMARY OF FINDINGS         -           -           -           -           -           -           36



5.1       SUMMARY  -           -           -           -           -           -           -           -           -           38

5.2       CONCLUSION       -           -           -           -           -           -           -           -           39

5.3       RECOMMENDATIONS   -           -           -           -           -           -           -           41

BIBLIOGRAPHY   -           -           -           -           -           -           -           -           -           43

APPENDIX I           -           -           -           -           -           -           -           -           -           45

APPENDIX II         -           -           -           -           -           -           -           -           -           46




Nigeria has been endowed with abundant human and material resources. Yet, imports bills for good and agricultural raw materials have been on the increase over the years.

Prior to political independence and immediately after the country got its independence, it was not only sufficient in food production and agricultural raw materials, but was generally having surplus for export.

Statistics from the Central Bank of Nigeria indicates that the agricultural sectors share of the gross domestic product G.D.P was as high as 65 percent in the sixties but has been on the decline since then. In 1973, it contributed 31 percent, while only 23 percent in the 1990s At the same time, food importation has been on the increase.

Concerted efforts have been made by government, federal, state and local government and by organizations and co-operative union towards improving the delivering agricultural output.

More than 80 percent of the Nigerian agricultural producers are peasant farmers who are low-income earners. Lack of credit facilities to these categories of farmers is greatly happening the needed change from subsistence farming to large-scale mechanized farming. Inadequate or lack of credit facilities is one of the most important factors that make it difficult for peasant farmers to innovate new methods of farming and implementation of research finding cannot be adopted if access to financial resources is restricted or not in existence.

For the expected transformation to take place in the rural sector, the technology and technique of agricultural cultivation, the quality of seeds planted, storage and marketing facilities must be improved to enable such improvements to take place. Financial resources through rural credit must be adequate it is quite obvious that most peasant farmers do not possess enough resources of their own to acquire such basic implements like tractors and animals driver ploughs, spraying equipments and pay for fertilizers and other inputs which are usually very expensive.

There are quite a number of sources of agricultural credits available to farmers these are categorized into two mainly institutional credits in Nigeria are obtained from commercial banks, cooperative societies, bank of agriculture, while the non-institutional sources of credits includes money lenders, landlords, shopkeepers relations and friends, which are more assessable to the peasant farmers.

For peasant crops like cocoa and palm trees as opposed to food crops, long term credit is required which is obtainable only from banks. The nationwide network of branches of various banks is not doubt a great advantage and importantly no doubt facilitate flow of funds to the grass root. However, this has not been achieved due to a number of problems. Which are:

i.             Natural hazards which are rampant these days e.g. flood and diseases to live stocks.

ii.           Untimely approval of loans

iii.         Lack of adequate supervision by the extension workers in charge of the scheme. Most of these farmers need supervision to ensure the right usage of the funds and to discuss problems with them.

iv.         Most importantly amongst the problems is that of inadequate funds which the banks are battling to overcome.

The birth of Bank of Agriculture B.O.A formerly known as Nigeria Agricultural Cooperative and Rural Development Bank [NACRDB] limited as the single largest development finance institution in Nigeria followed the successful merger of the former People’s Bank of Nigeria [PBN] , the defunct Nigerian Agricultural and Cooperative Bank which is now Bank of Agriculture and the risk assets of the Family Economic Advancement Programme [FEAP] in October, 2000. Thus; Bank of Agriculture [B.O.A] is dedicated primarily to agricultural financing of small and medium levels, as well as micro financing of small and medium scale enterprises.AGRICULTURAL PRODUCERS

In October 2010, the name was changed from Nigeria Agricultural Cooperative and Rural Development Bank [NACRDB] limited to Bank of Agriculture Limited. 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 corporate 60% and the Central Bank of Nigeria 40%. The Bank’s broad mandate encompasses saving mobilization and the timely delivery of affordable credit to meet the funding requirements of the teeming Nigerian population in the agricultural and non-agricultural sectors of the national economy.

Bank of Agriculture (B.O.A) was established as a national credit institution on November 24, 1972 and went into operate in March 6, 1973. Today’s Bank of Agriculture Limited, actually took its new name at the instance of the Nigeria Government. This is in the government’s view was to reflect more vividly, the Bank’s commitment to agricultural development through the promotion and financing of cooperatives.AGRICULTURAL PRODUCERS

Prior to the establishment of (B.O.A) as an institutional lender to farmers, the financing of the Nigeria Agricultural sector was essentially being handed by a variety of public institutions. These include the fund for Agricultural and Industrial Development, the regional local government Boards, development corporation and the regional marketing Boards.

The general consensus however was that these credit financing institutions failed due to some factors. Agricultural experts say these factors range form “political interference, inefficient project appraisal, monitoring and supervision” to law courage of the farming population inadequate funding. Adoption of excessively rigid and time consuming procedure for processing loan applications, low loan recovery and untimely loan disbursement.

Thus the bank of Agriculture is today a welcome relief to the Nigerian farmers. The Bank’s inauguration marked an important landmark in the history of nation’s agricultural development and it has continued to serve as a national financial institution devoted entirely to investing in all aspect of the agricultural industry.


The main objective of banking of agriculture is to finance agricultural production both at large and small scale special grants and large sums of funds is apportioned to the bank by the government on annual basis for disbursement to farmers. However, the output from agricultural sector continue to be on the downside year after year. Despite the country’s past fertile land and abundant labour, large percentage of the country’s import is in food majored in rice, wheat, maize and other agricultural raw-materials, which were produced and imported in the past story of agricultural productivity in Nigeria.AGRICULTURAL PRODUCERS

It is against this background that the researcher intends to study the problems and prospects of lending to small scale farmers by the Bank of Agriculture (B.O.A) limited.


The research aimed at discovering the problems and prospect of lending to small scale farmers via the bank of Agriculture. The research therefore intends to achieve the following objectives:

1.           To find out the terms and conditions for agricultural loans.

2.           To understand the procedures involved in the lending process by the Bank.

3.           To find out the constraints faced by the bank in disbursement and repayment of loans by small scale farmers.

4.           To assess the prospects of lending to small farmers by the bank of agriculture.


The research question put forward are as follows:

i.             What is the nature and extend of lending to small scale farmers?

ii.           What is the problems of lending to small scale farmers

iii.         Are there bright futures to agricultural financing in Nigeria?

iv.         Do small farmers have access to finance offered by the bank of agriculture.


The importance and significance of this study cannot be over emphasized. The research will gain in-depth knowledge about the activities of bank of agriculture in financing agricultural production, in addition, the public too will find this project very informative and useful.

Secondly, this study will serve as an important reference material for student in future that will be faced with the task of project working in similar area. The finding of this project will provide adequate information for their project writing.

Lastly, it will go a long way in assisting the government in Agricultural policies concerning agricultural-lending schemes.


The researcher work is restricted within Bank of Agriculture (B.O.A) limited. And only in the small scale agricultural producers (farmers) lending scheme. The researcher wish the projects is designed to be carried out on all the banks operated schemes but, this cannot be achieved due to a lot of constraint ranging from lack of comprehensive report on all the scheme the bank operated in the head offices. This can only be found in the branch offices who operate the schemes. Financial constraints and time factors contributes as to why the researcher could not travel far and wide in order to obtain the date for the research work.AGRICULTURAL PRODUCERS

The inaccessibility to some relevant data classified as “confidential” created a set back to this work. The researcher also encountered problems of poor response from management staff who complained they are not in position to comment.AGRICULTURAL PRODUCERS


Lending is a complicated case that is likely to tarnish the image and integrity of the affected bank. Because of this, affected banks do not always willingly give out information about the case study. Therefore getting information about the problems and prospect of lending to small scale producers on the bank is proving more difficult as expected.AGRICULTURAL PRODUCERS