ABSTRACT

Agriculture was a vital and dominant sector in the Nigeria economy prior to the discovery of oil in the early 70s. However, because of the much emphasis on Oil exploration the sector was neglected and Nigerians began to rely increasingly on importation of both food and raw materials instead of investing in and developing the agricultural sector. There is no gainsaying the fact however that necessary requirement for turning the Nigerian economy around and for agricultural development is agricultural credit or finance seen as a vital input in this process. The nature of agricultural production in Nigeria makes it rather a difficult sector for deposit money banks, to fund, It is characterized by a majority of literate farmers with small and fragmented farm holdings who can not meet banks stringent measures with respect to provision of collateral and other precondition laid down by banks. The researcher depended on secondary data obtained from the CBN statistical bulletin for 2007. The hypothesis was tested using the regression analysis with annual time series covering the period 1991- 2005. Based on the empirical analysis, findings were made among which are: The credit granted to Nigerian farmers by deposit money banks were diverted to other sectors, that deposit money banks are major institution that 'und agricultural development in Nigeria. It is against this background that the researcher recommends that the CBN should as a matter policy increase deposit money bank lending ceiling such increase should be allocated to the agricultural sector and deposit money bank should encourage the establishment of a monitoring unit in their branches and staff of that department should be encouraged with incentives so as to discourage them from taking bribe.