The effect of government intervention on rural agricultural financing in Abuja: a case study of Co-operative Bank of Nigeria
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Background of the Study
Government intervention in rural agricultural financing is designed to stimulate agricultural productivity and ensure food security. In Abuja, targeted policies such as subsidized loans, credit guarantees, and regulatory reforms have been introduced to support rural farmers. Co operative Bank of Nigeria has been a key player in implementing these policies, thereby facilitating increased credit access and improving loan performance for agricultural projects (Abubakar, 2023). These interventions aim to reduce the cost of borrowing, mitigate credit risk, and foster sustainable rural development. Government initiatives often work in tandem with financial institutions to deliver tailored financial products that address the specific challenges of rural agriculture, such as seasonal income variability and collateral constraints (Ogunleye, 2024).
The bank leverages government-backed programs to offer preferential interest rates and flexible repayment options, which are critical for smallholder farmers. Such programs not only enhance the bank’s risk management capabilities but also contribute to increased loan uptake and improved agricultural output (Ibrahim, 2025). Additionally, government intervention often includes capacity-building components, such as training on modern agricultural practices and financial management, which further empower rural communities. This multifaceted approach ensures that the benefits of government intervention are transmitted to both financial institutions and end-users, thereby creating a more resilient rural financial ecosystem.
Despite these benefits, challenges remain in the effective implementation of government intervention measures. Bureaucratic delays, inconsistent policy application, and regulatory ambiguities can diminish the impact of these initiatives. Furthermore, there is a risk that over-reliance on government support may lead to moral hazard, reducing the incentive for banks and farmers to adopt sound financial practices. This study investigates the effect of government intervention on rural agricultural financing in Abuja, using Co operative Bank of Nigeria as a case study. It seeks to analyze the outcomes of these interventions on credit accessibility, loan performance, and overall agricultural productivity, while also identifying areas for policy improvement.
Statement of the Problem
While government intervention is intended to bolster rural agricultural financing, several issues impede its effectiveness in Abuja. A primary problem is the delay and inconsistency in the disbursement of government-supported funds, which disrupts the timely delivery of credit to farmers (Chinwe, 2023). Such delays create uncertainty and reduce borrower confidence, ultimately affecting loan uptake. Additionally, bureaucratic hurdles and administrative inefficiencies often lead to uneven policy implementation, with some regions benefiting more than others. This uneven distribution of resources not only undermines the objectives of government intervention but also contributes to regional disparities in agricultural development.
Furthermore, the existing regulatory framework sometimes conflicts with the practical needs of rural banking, leading to rigid lending criteria that are ill-suited to the variable income patterns of farmers. The risk of moral hazard is another concern; excessive government support may reduce the impetus for both banks and borrowers to maintain prudent financial practices (Olayinka, 2024). These challenges are compounded by inadequate monitoring and evaluation mechanisms, which hinder the continuous improvement of intervention strategies. As a result, the intended benefits of enhanced credit access and improved agricultural productivity are not fully realized. This study aims to investigate these problems in depth by examining the interplay between government policies and bank lending practices in rural Abuja, with a focus on identifying critical bottlenecks and proposing actionable recommendations for more effective intervention.
Objectives of the Study
• To assess the impact of government intervention on agricultural credit delivery.
• To identify challenges in the timely and equitable implementation of intervention measures.
• To recommend strategies for improving the coordination between government programs and rural banks.
Research Questions
• How does government intervention affect credit accessibility in rural Abuja?
• What are the key barriers to effective policy implementation?
• What measures can improve the synergy between government initiatives and banking operations?
Research Hypotheses
• H1: Timely government intervention significantly increases credit uptake.
• H2: Administrative inefficiencies negatively affect loan performance.
• H3: Enhanced monitoring mechanisms improve intervention outcomes.
Scope and Limitations of the Study
This study focuses on rural agricultural financing in Abuja as influenced by government intervention from 2023 to 2025. Limitations include policy variability and data access challenges.
Definitions of Terms
• Government Intervention: Policy measures and financial support provided by the government.
• Rural Agricultural Financing: Credit services offered to support agricultural activities in rural areas.
• Moral Hazard: The risk that a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk.
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