Background of the Study
The role agriculture plays in bringing about economic growth and development in a nation cannot be overemphasized; the reason why an economy can brag of sustainable food security; is because it produces enough food to feed her citizens and even export these goods to other needy countries, thereby generating foreign exchange, which in turn increases the national income of the country in the long run. The setback facing agricultural finance in Nigeria is inadequate capital and credit or finance for start-up, investment and expansion.
Monetary policy, through its influence on the financial sector of the economy, plays a major role in making credit available to the agricultural sector, and in fact; paves way for the adequate financing of agriculture in NIGERIA. Monetary policy facilitates the establishment of agricultural businesses through availability of credit and finance for start-up, investments, and expansion. The CBN controls the availability of credit through monetary policy instruments.
In this study, the link or otherwise, the connection between monetary policy and agricultural finance, will be examined by identifying the various instruments of monetary policy; and how the interplay and adoption of these instruments connects agricultural finance in Nigeria: that comprises the full range of agricultural financial services – loans, savings, insurance, and payment and money transfer services – needed, offered, or used in rural areas by household and enterprises.
OBJECTIVES OF STUDY
The main objectives of this paper are as follows:
- To justify the link between monetary policies and agricultural finance through the instruments of monetary policy;
- To identify the roles of monetary policy and how it relates to agricultural financing in Nigeria.
- What are the effect(s) of monetary policy instruments on agricultural finance in Nigeria?
- How effective is the monetary policy in Nigeria; in providing cheap and flexible Agricultural Finance?
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