CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The
role of banks is critical to the development of a nation in terms of credit to
agricultural sector, the rural areas and small business in general. This is
because it drives capital formation and technology upgrade Anyanwu,
J.C. (2002). Bank of Agriculture activity in this area
involves the direct making of loans and strengthening of local micro finance
banks, which deliver credit at the local community level.
The bank has a mandate to
provide low cost credit to small holder and commercial farmers, and small and
medium rural enterprises. It also provides micro financing to small and medium
scale non-agricultural enterprises. It aimed at ensuring effective delivery of
agricultural and rural finance services on a sustainable basis to support the
national economic development agenda, including food security, poverty
reduction, employment generation, reduction in rural to urban migration, less
dependency on imported food items, and increase in foreign exchange earnings Adeleke,
S. & Damilola, F. A. (2013).
The
bank have embarked on various initiatives to strengthen the cooperative credit
structure at local and state government level as well as rural micro finance
banks. The effect is that adequate and timely credit is made available to the
needy Ketu,
A. A. (2008). In order to reinforce productive and the
growth of the Nigerian economy, Bank of Agriculture began the implementation of
a number of developmental and promotional activities such as:-
1. Work with cooperative groups at the
states and local government level to prepare development action plans.
2. Enter into collaborative or
on-lending MoU with state governments and cooperative associations and
microfinance banks specifying their respective obligations to improve the
affairs of the groups and banks within a stipulated timeframe
3. Monitor implementation of
development action plans of cooperative associations
4. Provide financial assistance to
cooperatives for establishment of technical, monitoring and evaluations cells
5. Provide Organization development
intervention (ODI) through reputable training institutes like Federal
cooperative colleges, Universities of Agriculture, and departments of
agriculture of various universities in Nigeria Chisasa, S.
(2015).
6. Provide training for senior and
middle level executives of local commercial bank branches, micro finance banks
and cooperative associations
7. Create awareness among the borrowers
on ethics of repayment through local debt collectors and cooperative marshals
that enforce timely repayment and prompt remittance of same to the lending
institution
8. Provide financial assistance to
microfinance banks for building improved management information system,
computerization of operations and development of human resources Obilor
(2013).
Credit delivery is
perhaps one of the most important roles of Bank of Agriculture. The
loans extended are used to expand existing businesses and in some cases to
start new ones. According to CBN (2008), Bank of Agriculture loans granted to famers,
small and medium scale businesses is increasing from 2007 to date. Ketu (2008) observed that Bank of Agriculture
has disbursed more than eight hundred million micro-credits to over 17,000
farmers and enterprises across the country to empower their productive
capacities. As such it is expected that the entrepreneurial capacity of the
farmers and enterprises will thus improve, thereby contributing to the Nigerian
economic growth in term of employment and GDP Garba, P. K. (2000).
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