AN ANALYSIS OF THE RURAL BANKING PROGRAMME IN NIGERIA: A CASE STUDY OF SAMINAKA LOCAL GOVERNMENT AREA OF KADUNA STATE (1977-1989)

AN ANALYSIS OF THE RURAL BANKING PROGRAMME IN NIGERIA: A CASE STUDY OF SAMINAKA LOCAL GOVERNMENT AREA OF KADUNA STATE (1977-1989)

Abstract:

One of the most s e r i o u s problems t h a t impede economic development of r u r a l economies world wide is t h e g l a r i ng p r e v a l e n c e of low l e v e l of income and p r o d u c t i v i t y . It i s r e c o g n i s e d t h a t an e f f i c i e n t banking system, through p r o v i s i o n of c r e d i t i n the r u r a l a r e a s , is capable of r a i s i n g the income l e v e l and p r o d u c t i v i t y in t h e r u r al a r e a s . As such many developing c o u n t r i e s such as I n d o n e s i a, P h i l i p i n e s , I n d i a and N i g e r i a embarked on the i n t r o d u c t i on of v a r i o u s Rural Banking Programmes. In N i g e r i a t h e Rural Banking Programme i n t r o d u c e d in 1977 was aimed at i n c u l c a t i n g banking h a b i t s among the r u r a l i t e s , m o b i l i s i ng of d e p o s i t s from and e x t e n d i n g same in t h e forms of l o a ns and advances to t h e r u r a l i t e s , as well as i n t e g r a t i n g t he r u r a l i t e s i n t o the fold of o v e r a l l economic l i f e of the n a t i o n . The main t h r u s t of t h i s r e s e a r c h t h e r e f o r e is to examine the e f f i c a c y of t h e Rural Banking Programme through an e m p i r i c a l assessment of the performance of the N i g e r ia U n i v e r s a l Bank and A l l i e d Bank of N i g e r i a in m o b i l i s i ng d e p o s i t s from and e x t e n d i n g same as c r e d i t to the people i n Saminaka Local Government Area of Kaduna S t a t e . The t h e s i s also t r i e s t o a s s e s s t h e a t t i t u d e of the people towards t h e programme, with a view to e s t a b l i s h i n g the l e v e l of acceptance of the programme in the a r e a ; as well a s examine t h e impact of r u r a l banks on t h e p r o d u c t i v i ty o f the r u r a l i t e s. Our findings have confirmed the hypothesis that establishing banks in the rural areas will give rise to the mobilisation of deposits from and credit extension to the r u r a l i t e s . The study however discovered that the level of credit extended was continually falling far below the desired level, which implies a financial drain of the rural deposits for onward investment outside the rural areas. The research findings also confirmed the hypothesis that rural banks enhance rural productivity. However the findings revealed that the impact of bank credit on rural productivity is limited by harvest conditions and the size of credit f a c i l i t i e s. Other discovery made in the area of study was that traditional saving i n s t i t u t i o n s s t i l l survived as an important source of credit in the area and to some extent they influence banking habits among the r u r a l i t e s. The research further concludes that the programme has failed to remove the fcredit trap1 that the a f f l i c t the r u r a l i t e s . Some recommendations were also offered for consideration in any rural credit policies the Government might decide to embark upon. such recommendations include among others the need for Government to address the problems that characterise procurement of c e r t i f i c a t es of occupancy and t i t l e deeds over landed properties, the need for Government to intensify i t s policies on People’s Banks, Community Banks, Nigeria Agricultural and Cooperative Bank, ACGSF and the recently introduced Agricultural Insurance scheme.

AN ANALYSIS OF THE RURAL BANKING PROGRAMME IN NIGERIA: A CASE STUDY OF SAMINAKA LOCAL GOVERNMENT AREA OF KADUNA STATE (1977-1989)