IMPACT OF AGRICULTURAL FINANCING ON AGRICULTURAL PRODUCTIVITY IN NIGERIA: MODERATING EFFECT OF CORRUPTION

Abstract

Over the years, the Nigerian government has introduced several initiatives to enhance agricultural 
financing, including the Agricultural Promotion Policy (APP), Anchor Borrowers Programme 
(ABP), Commercial Agriculture Credit Scheme (CACS), and NIRSA. However, agricultural 
output has not grown proportionately, largely due to corruption. Once a global exporter of cocoa, 
palm oil, and groundnuts, Nigeria now depends heavily on imports of staples such as rice and 
wheat. While agricultural financing is known to boost productivity, the moderating role of 
corruption remains less explored. This study investigates the impact of agricultural financing on 
agricultural productivity in Nigeria, with corruption as a moderating factor. Annual time series 
data from 1996–2022 were sourced from the Central Bank of Nigeria (CBN), World Development 
Indicators (WDI), and Transparency International (TI). The Autoregressive Distributed Lag 
(ARDL) model was employed to capture both short- and long-run dynamics, with structural 
breaks incorporated through dummy variables. Results show that government agricultural 
expenditure has a positive but statistically insignificant effect on productivity, while the 
interaction between expenditure and corruption exerts a negative and significant effect in both the 
short and long run. This indicates that corruption undermines the effectiveness of agricultural 
financing. The study recommends strengthening transparency and monitoring of agricultural 
spending, reinforcing anti-corruption mechanisms, and ensuring policy consistency to maximize 
the benefits of agricultural financing.