Performance analysis of Nigerian agricultural credit guarantee scheme: Bounds test approach to cointegration

This study examined the performance of the Agricultural Credit Guarantee Scheme (ACGS) which is the major credit policy of the Federal Government of Nigeria. It was established in 1977 but started operation in 1978. Time series data from 1978-2014, extracted from the 2014 bulletin of the National Bureau Statistics were used for the study. Total volume and number of loans given were used to proxy the strength of the scheme, while the contribution of agriculture to GDP was used to proxy agricultural productivity. ARDL (Bounds) test approach to cointegration was employed to investigate both long and short run dynamics of ACGS and agricultural growth. The estimated results revealed that there is a long relationship among the total volume of loans, total number of loans and agricultural productivity. The long run elasticity showed that total volume of loan will not significantly influence productivity in the long run while the total numbers of loans have a significant long run relationship with the productivity. In the short run elasticity, total volume of loans was not significant with productivity in the current year while it was significant in the past four years. The total number of loan beneficiaries had a negative but significant relationship with productivity in the past 2 and 3 years while the relationship in the past year was also negative but insignificant. However, there was a positive and significant relationship between total number of loans issued and productivity in the current year. The speed of adjustment, ECT(-1) value of -0.1991 shows that the model will return to long run equilibrium at the speed of 19.91% from short run disequilibrium. Key words: Agricultural credit, Agricultural Credit Guarantee Scheme (ACGS), ARDL, loan volume.