The Functions of the Nigeria Agricultural Cooperation and Rural Development Bank

The Functions of the Nigeria Agricultural Cooperation and Rural Development Bank

Nigeria Agricultural Cooperation and Rural Development Bank (NACRDB) has been recognized as veritable instrument for socio-economic development and rural change in all sector of the economy. The bank was established as a development bank especially for credit delivery and loan administration to each sector of the Nigeria economy. The bank NACRDB was establish on developed bank especially on credit delivery on loan administration on each sector of the Nigeria economy most especially the agricultural sector as it is the major source of food and raw material supply in the economy.

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It proved supply to the rural farmers who make up to 90 % of the agriculture sector to help them in acquiring enough land technology and production input for their agricultural business activities in order to increase their productivity. it provide the credit at a low interest rate and at time with or without collateral of it banking and at the san time increase the capital of the rural farmers. It also provide loan to the individuals, co operational organization, limited companies, hotel and federal agencies. It provide fund for direct investment in the equity capital of major agriculture and agro-allied ventures. Also it provide fund for the industrial processing and marketing of the agricultural product. Nigeria agricultural cooperatives and rural development bank (NACRDB) finance rural development project like building of medical center, introduction of new technology to the farming system, construction of food feeder roads, extension service. It performs advisory function. It dose this by instructing the beneficiaries of loan on how to make use of the loan obtain. It suggest to its beneficiaries on the viable project they can embark on that will be of benefit to the economy. This advisory role includes;

  1. Financial advisory service
  2. Entrepreneurial advisory service.

NACRDB take care of the financial needs of the agricultural cooperatives. It provide guarantee in the exceptional cases of variable agricultural and agro-allied ventures to form other countries, i.e. it funds foreign investment thereby encouraging foreign investment.

The institution encourage rural saving and investment by bringing the banking system closer to the rural populates and areas where the commercial bank could not reach

Source Of Fund:

Source of fund of the Nigeria agricultural co-operatives and rural development bank (NACRDB) can be either internal or external. The internal fund are supply through the;

  1. Share capital
  2. Reserves

The external fund are supplied through the

  1. Federal government funding
  2. Central bank of Nigeria loan
  3. International bank for reconstruction and development (IBRD)

Nigeria agricultural cooperatives and rural development bank operation scheme

The NACRDB financial agriculture and agro-base project through the following operational loan scheme;

  1. Micro loan: this is the important type of loan. This loan is administered to those who are considered to be poor either the rural farmers whose income is not up to. And those rural farmers must be banking with the bank (beneficiaries). The minimum deposit for this type is # 100. To enjoy this loan, one must have an account with the bank. Its interest rate is 8%. Deposit are determine by the loaned o someone. This loan is giving to encourage the small-scale farmers to increase more on their agricultural ventures. It also encourage the rural populates to embrace the banking system. These are micro loan of NACRDB
  2. Second livestock development programme:  this is provided for the livestock farming. It also provided for the for the small-scale farmers.
  3. People target saving loans: Rural livestock ae encourage to save part o their income periodically. This loan is giving to them based on the amount saved, i.e. there total saving is multiply by four (4) is giving to them so that their deposit them serve as partial collateral
  4. General saving loan: these loans encourage people to open an account and to apply for loan for about 90 days.

Margo – Loans:

This is another type of loan system by NACRDB. It being administered to the individual or company who satisfy certain condition as may be giving to them by the bank. The loan ranges from I m to any limit the bank can afford. Its interest is 20 percent. This type of loan is for the large-scale company like the limited liability company for the expansion of their business. The loan can be in form short term, medium term and long-term loan. The duration of payment of short-term loan is one year. And the amount giving as credit ranges form 250,000 to 1m. For an individual to qualify for this loan, he or she must have up to 300,000 as his income for collateral but for firms two guarantor are required and any amount fixed by the bank. Medium term loan has durations of one (1) year to tow (2) years and the amount for credit is above 1m. Asset is used in securing loan in the medium tem loan scheme. The security can be in form of landed property. Long-term loan has the duration of three years and above and the amount giving as credit is above 1m. Also landed property can be used as a collateral for the loan.

On lending scheme: under this scheme, fiancé is made available to the establishing institution against repayment guarantee foe an award lending to the small-scale farmers. The on lending includes the government cooperative of cooperative organization, agricultural credit cooperation, agricultural development projects and river basin and rural development authorities. The on-lending scheme has the following objectives

  1. To reach very large volume of farmers especially those who otherwise would have been excluded due to the size of their holdings, thus providing fund for the storage, production, processing and marketing of the agricultural products.
  2. To combine credit component with extension, services, rural education input procurement and marketing through interpreting approach..
  3. To improve on the institutional service rendered to the farmers and strengthen the organization set up and moral for the bodies by means of proper project preparation, strict lending condition and supervision of the scheme
  4. Direct lending scheme: here the bank deals directly with the individual farmers, organization etc without going through an on-lending agencies. Under this scheme, individual can obtain loan amounting from 50,000 to 200,000. The bank monitors the application of the fund by the use of discourages loan diversion.
  5. Small holders loan scheme: this is design to allow fund reach the small-scale farmers in the rural area directly. The security require is that the farmer satisfy that operational staff that he a full time farmer with the farm loan belonging to him or his family. He also has to prove that he is resident in the village where the farmland is located that also he can produce two guarantors to guarantee the loan. This loan can be direct through the bank or indirect through the on-lending agency scheme
  6. Special smallholder scheme: it is an on lending type design to reach small-scale farmers to the grass root. Disbursement is supervise by the state ministry of agriculture is directly controlled by the office of the sate government. The tenure of the loan is one year
  7. Workers scheme: this bank treated this scheme because of the sympathy they have on the retrenched workers. the scheme is created to alleviate he suffering of the workers as well as contribute their own quota towards the growth of agricultural output in the country. The security require for this loan is the guarantor of food standing


A borrower witching to raise money form NACRDB is expected to meet the following condition;

  1. Viability of the project for which loan is sought should be in conflict with the federal or any policy acts
  2. Be commercially viable and is capable of showing reliable return on the investment made
  3. Generate adequate fund to repay the loan in full and be in accordance with the loan stipulated terms and condition.


The Nigeria cooperative and rural development bank (NACRDB) since its establishment has not been very efficient in rendering its service of loan administration to the general economy. His is due to some problem and difficulties in investors in carrying out loan disbursement it is as a result of the recent merging of the farmers NACRDB, PEN, and FEAP to form NACRDB. The bank has not been able to make much disbursement. This is due to the fact that it is still undergoing internal reconstruction and also it is finding it difficult to cover the outstanding loan of NACB, PEN, and FCAP. NACRDB also experience the problem of default in repayment of loan ( on the part of the borrowers. Some borrower do not repay for the loan borrowed at the stipulated period it is required to be played. As a result of this, the banks are Atimes discourage to disburse out loan. This due to the fear of the borrowers not paying back in time or not even paying back atoll.

Another problem the NACRDB experience is the issue of the collateral security, which is one of its requirements for the disbursement of the loan. Do the fact that the NACRDB deals with the rural farmers and small low scale traders who comprises of low-income earners, most of them are scared form banking with the NACRDB because of non- availability of the collateral security. Most of the beneficiaries of the NACRDB are the rural farmers that are not enlighten, so they find it difficult to understand the benefit of borrowing (NACRDB) and the guideline of borrowing. So as a result, they fail to meet up with the banking rule. Another problem of loan administration by NACRDB is the problem of diversion of loan to other project other then the proposed one.. Some borrower use the money purpose for a project for another project which might not be viable due to economic growth and development in the country. Ti will also discourage the federal government form allocating large fund to the bank (NACRDB). Some of the staff of NACRDB is not well train in the field of co-operation and management The result of the staff not being efficient in rendering the bank service.  Some of them that are selfish even embezzle fund map out for a specific rural development project. The major factor that hinders proper loan administration by NACRDB is the inability of the rural populates to pay interest and also with the pronouncement of the major in the year 2000 people become reluctant in depositing and accepting loan from he bank (NACRDB)

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This article was extracted from a Project Research Work Topic




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  1. jazuliabdu says:

    Thank for assist to me in my assig.

  2. owosco efcc says:

    hw can sum1 analysis data with d use of spss application software kindly asist pple pratically base on dis issue becos many students find dificult in carrying dia project due to lack of knowledge on it

  3. in Nigeria, how much acres of corns? a lot? then the corn machinery may be a huge market

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