Impact of Bank Lending to the Agricultural Sector on Food Production in Niger State

Agricultural credit from commercial and development banks is an important enabler of food production, and examining this relationship in North Central states like Niger State, a major food-producing region, is essential for policy targeting. This study examines the impact of bank lending to the agricultural sector on food production in Niger State for the period 2010 to 2022. Secondary data were sourced from the Central Bank of Nigeria Agricultural Credit Guarantee Scheme Fund reports, the Niger State Ministry of Agriculture, and the National Bureau of Statistics. Food production was measured by aggregate crop output index and staple food production volumes. Agricultural lending was measured by total bank loans under the Agricultural Credit Guarantee Scheme disbursed to Niger State beneficiaries. Ordinary least squares regression and Granger causality testing were employed. Results showed a significant positive effect of agricultural credit on food crop output (coefficient = 0.34, p < 0.05), with Granger causality running unidirectionally from credit to output over a one-year lag. Cereal and root crop production were most responsive to credit availability. The study concludes that agricultural bank lending significantly stimulates food production in Niger State, but coverage gaps remain particularly for smallholder farmers not reached by formal lending. Expanding the Agricultural Credit Guarantee Scheme Fund to include digital agricultural loan products and mobile disbursement is recommended to increase reach in remote North Central communities. Keywords: agricultural lending, food production, Niger State, Agricultural Credit Guarantee Scheme, North Central Nigeria