The Role of Central Bank of Nigeria PLC in Agricultural Finance Development

THE ROLE OF CENTRAL BANK OF NIGERIA PLC IN AGRICULTURAL FINANCE DEVELOPMENT – PROBLEMS AND PROSPECTS

This research work in particular is very crucial one in any economy as it deals with policies of the bank at the apex of the banking system (the central Bank) and one of the most priority sector of Nigeria economy – the Agriculture sector.  As a result much ought to have been written on it by eminent school and schools of thought in the field of banking, finance, monetary economies and Agriculture, but only very few have dealt with the two aspect (CBN and Agriculture).

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The policies of the central bank of Nigeria as they affect agriculture are mainly on the monetary programs, and fiscal policies.  However, the literature reviewed were the background of agricultural financing, importance, problems, establishment of the CBN  and its organization, roles and policies (fiscal and monetary policies) of the CBN in relation to Agriculture and its other policy instruments / programmes.

Also Read: The Role of African Development Bank in Nigeria Economic Development

• HISTORICAL PROSPECTIVE OF AGRICULTURAL FINANCING IN NIGERIA

Tracing the early sources of agricultural credit financing in Nigeria, M.O. Ijere (1983) wrote “there are three categories of Agricultural credit in Nigeria – The organized credit which is characteristically subject to the market laws of supply and demand and are granted by institutions.  The organized credit is characterized by its being given by private person on whose whims and caprices the conditions are completely dependent as it is less regulated by the market forces of Demand and supply, in between them is the quabi organized credit which contains the characteristics of both”.

In a study on the early Agricultural credit institutions: Nzewi 91986) stated that “tare provisions of institutional agricultural credit in Nigeria dates back to the 1930s when the native authorities in Northern Nigeria undertake to finance mixed farming” According to this man “agricultural  financing by a public credit institution started on a nation wide scale with the Nigeria local Development loan Board which was established in 1946 but centralized along regional lines in 1947.

These boards were not efficient and so were re-organized into the western state Agricultural co-operation fund for the Agricultural and industrial Development and the mid-western Nigeria Agricultural credit co-operation.  Agricultural loans in the North were mostly in form of government guaranteed overdraft from commercial banks.  As a result of the credit gap existing in the four regions which these institutions were unable to fill the Nigeria Agricultural and cooperative bank (NACB) was established in 1973 to boost agricultural production and enhance agricultural development in Nigeria.

1. Adeyean (1981) in his own write –up holds that commercial banks represent the oldest credit institution in the country but that since they are operating especially for profit, most of their lending activities were concentration in non-farms investment opportunities. He went further to stress that in attempt to over this, led to the establishment of financial institution charged with the specific objective of making loans available to farmers. This started in 1949 when the western Nigeria Development Boards took over responsibility for credit supply in western Nigeria and in 1955 when the western region finance corporation took over the administration of credit farmers.

Also, he stated that in 1964, the western Nigeria credit corporation was established to further reform agricultural credit institutions.  And in the former Eastern Nigeria credit was provided from the fund for agriculture and industrial development while in the Northern in the Northern Nigeria agricultural credit was administrated by the Registrar of corporation under which the government guaranteed loans from Backings Bank (as it was then called now union Bank) to cover pre-season loans.

• THE IMPORTANTANCE OF AGRICULTURE

Apart from the need to eradicate hunger, agriculture is necessary for increasing the pace of economic growth, for expansion of employment opportunities, for reduction of poverty and important  of income distribution for speeding up industrialization for easing the pressure of balance of payments “(Nwankwo (1981).  Stressing his point further, he maintained that the fourth National Development plan re-emphasized that agriculture continues to be maintained of the Nigeria economy.  Sourcing the raw materials needs of the country and providing the bulk of the employment, income and for the population.

In his contribution, Tnsuf (1990) holds that “in its modern concept agriculture goes far beyond providing food perse but problem of Agriculture thus, he stated that another mechanism is rural banking – the primary aim of which the rural development and the extension of banking services and bank credit to the care should be taken to ensure that rural banking does not result in rural  decay. This can occur if, as has been the experience with the first phase of rural banking in the country, rural banks/ branches are used more for gathering deposit from them for extending credit to the rural population.

• THE PROBLEMS OF AGRICULTURAL FINANCE IN NIGERIA.

Nigeria agricultural system being subsistence type where the farmers income are very low to provide all they need for a viable agricultural production.

In buttressing the problems of agriculture in Nigeria, Adegeye (1992) indicated that “almost all farmers require credit from formal sources but a few are capable of obtaining it”.  This is because a number of problems are associated with the supply of credit to small farmers.  The security which could be used to obtain loans and when they do, it is usually not enough (inadequate to support viable ventures).

Expressing her own version of the problem, Oyatayo (1981) stressed that the problems facing Nigeria’s agriculture can be discussed under four board heading namely; technology, Marketing, financial and governmental : she went further by saying that such problems includes problem of providing adequate extension services, storage facilities agricultural inputs, market information and efficient marketing arrangement, physical infrastructure (like feeder, roads, electricity) agricultural credit and or of course institutional reforms where necessary’.

Also lending weight to these factors were those enumerated by Akingbade (1981).  These problems of Agricultural credit and finance in Nigeria.  They identified High cost of labor, inadequate rural development, marketing problems, planning problems, inadequate agricultural incenture etc.

Writing on the need for capital for agricultural capital requirement Oriancle (1987) expressed his view saying “The infusion of technology in Agriculture require capital for the purchase of necessary inputs such as improved seeds, fertilizer, agrochemical and implements”.  He also acknowledged that the finance  to accomplish this is beyond the reach of most farmers.  Government in order to overcome this financial handicap, intervened by arranging to provide credit to farmers at suitable terms, hence the establishment of Nigerian Agricultural credit and Guarantee scheme fund (ACGSF).

The major problems of Agricultural financing having been identified Nwankwo (1981) suggested a solution to the credit.

2.4     THE ESTABLISHMENT OF CENTRAL BANK IN NIGERIA

Central Banking is world phenomenon and it is now taken for granted as an indispensable accompaniment of financial structure of any independent country.  In Nigeria, it is merely thirty five years old.  The question is why central Banking?  Every country wants to maintain reasonable stability in its price level and to keep its economy up to an even level.  If a country decides to do so by discretionary control of its economy then through the whims and caprices of the invisible hands then it has a need for central banking.  Therefore, a cardinal foundation for central banking discretionary control of the monetary system.

In developing country like Nigeria, where there were no indigenous financial system to control: central banks emphasized first the development of financial system, the institution and development of turning credit machinery, the provision of remittance and other resources for economic development.

Thus the central bank of Nigeria (CBN) established in 1959 performs the traditional role of controlling the monetary system; and  in addition to this traditional role, it has also assumed a non traditional the which can be described as developmental and promotional.  The banking failures of the early 1950s lid to the power of control of banking being vested in the financial secretary.  This brought about low opposing camps.  The Nationalist who were of the view that a central Banking was needed to perform this other traditional central banking functions, and the colonial who believed that it was prenatal to introduce a central bank in a country where there was no financial system.  In order to resolve the opposing views, a total of three studies was commissioned namely:

1. L Fishers Report 1953
2. B.R.D Mission Report 1955
3. B Loynes Report 1957.

This traced the historical perspective of the CBN to when the colonial Administration in November 1952 invited J.L fisher, Adviser to the Bank of England, to report on the desirability and practicability of establishing a central bank is Nigeria as an instrument of promoting economic development of the country.  He concluded that it would be inadvisable to contemplate the establishment of a central bank at the moment on the ground that the financial environment did not exist and that financial environment did not exist and that it would be impossible to find the local staff to man it.  He also contented that the west Africa currency Board (WACB) was equal to the task of promoting savings and capital formation.

As an alternative, fisher recommended the formation of a development corporation by the government, the issue of treasury bills, the establishment of an institution by government to lend to cooperative societies and finally the use of post office saving for development purposes.  In addition, he recommended a three step programmes lending to the development of central bank.  These step programmes are:

1. To transfer the operation of WACB to African so that its management would eventually be indigenes after the local people have acquired the necessary experience.
2. Establishment of a Nigeria currency Board and a separate Nigeria currency to take over Nigeria’s share of WACB assets.

• Establishment of a bank of issue as the embaryo of a future central bank.

In 1957, the federal Government of Nigeria invited another bank of England adviser in the person of J.B Loynes to advise on the establishment of a federal institution to perform appropriate central banking functions Mr. Loynes and his team after four months in Nigeria, submitted a comprehensive report in August 1957 recommending the establishment of the central bank of Nigeria.

Withregards to the report, the federal government passed the central bank of Nigeria act 1958 (cap 19) on 17^th March 1958.  The legislation was formed based on J.B Loynes recommendation and views.  The ordinance became fully operational on the 1^st of July, 1959 with the head office in Lagos.

2.5     THE MAJOR DEVELOPMENT PROGRAMME AND POLICIES

OF CBN IN RELATION TO AGRICULTURE FINANCING

The activities of central Bank of Nigeria had expanded with expansion of the economy.  It assumed new roles some of which one would even consider as unconventional among the functions of central banks in developed countries.  The most effective techniques of control of the banking industry has been through the use of directives.  For developing countries these directives rather than the traditional instruments are required for the purpose of mobilizing credit and channeling them towards areas that require positive development.  In fulfilling some of these extra roles played by central bank in developing countries the CBN embarked on the following policies so as to channel funds to agriculture.

• AGRICULTURAL CREDIT GUARANTEE SCHEME FUND ESTABLISHMENT

The Agricultural credit Guarantee fund was established by Decree number 20 in march 1977.  The Decree provided for a fund of #100million subscribed by the federal Government of Nigeria to the tune of 60 percent (or # 60million) and the central bank to the tune of 40 percent (or #40million).  The purpose of the fund was to provide guarantee in respect of loans granted by commercial banks and merchant banks for agricultural purpose with aim of increasing the level of bank credit to the agricultural sector of the economy.  By the end of 1978 the paid up capital was #15million made up of #9million by the federal government of Nigeria and #6million by  the central Bank of Nigeria.

The fund is under the management the Agricultural credit Guarantee scheme fund board while the central bank of Nigeria serves as the managing agent for the day to day administration of the scheme the central bank acts as the secretary of the board of the fund and as the technical committee of the product prices and as the sources of finance of the commodity Board for market operation.

According to the act which established this fund, the maximum liability of the fund i.e 75 percent of the amount in default subject to, in case of a loan to an individual to a maximum of #50,000 and in case  of a loan to a co-operative societies or a limited liability company, to a maximum of #1m.  to save guard the loan issued from being misused, the Decree provided that where such loans credit to be used to purchase livestock or mactinery, or farm equipment, the loan should not be paid to the borrowers but to the supplies who should furnish the bank with the documents as the evidence of the delivery of which the loan can be guaranteed by the fun, the act defined as those connected with:

1. The establishment or management of plantions for the production of rubber, oil palm, cocoa and similar crops.
2. Animal husbandry, that is to say, poultry pigtery, cattle rearing and likes.

• The intimation or production of cereal crops beans, cotton, groundnuts, pineapples etc.

The security which may be offered to a bank for the purpose of any loan under the scheme may be one or more of the following:

1. A charge on the morable property of the borrowers:
2. A charge on land in which the borrowers holds a legal interest or right to farm or a charge on assets on the land including fixed assets, crops or livestock.

• A life assurance policy, a promising note or other negotiable security;

1. Any other security accepted to the bank;
2. Stock and shares
3. A personal guarantee

Application received by banks as a rules are expected to be processed promptly and it is envisaged that the period elapsing between the submission of an application and its disposal should not exceed to 60 days.  If a bank rejects any request for a loan under the scheme, such bank is expected to give reason or the rejection of the applicant and specify the steps the application  should take to enable him comply with the bank’s requirements.  The interest rate chargeable by banks on credit facilities provided under the scheme is to be prescribed by the minister finance from time to time.

The fund is managed by a Board of Directors of six members.  Two of the members represent CBN and the other four were appointed by the commission of finance.  These four is mad up of the one representative each from the federal ministry of finance, agriculture and water resources and two non-government officials one of whom must be the chairman of the board.

There has been are mark able increase in bank credit to the Agricultural sector since the introduction of the scheme.  The scheme categorized the borrowers into three structure of short term, medium term, and long term duration short term loans are to mature within three years, medium term between three and five years while long term mature over five years.  The purpose of the loan determines the payment period.

The CBN also classified loans granted by the scheme in terms of size as follows.

Small loans #10 – #50,000

Medium loans #50 – #100,000

Large loan #100 – and above.

2.5.3  INCENTIVES / WAIVER TO COMMERIAL BANKS

In order to achieve the commercial banks from the high operating cost, the following incentives were given to them.

1. Allowing the banks to write off the capital cost of erecting office blocks and staff quarters within the period of three years.
2. Exclusion of loans and advances grated during the first two years of existence in the computation of growth rates in loans and advances rate of adjusted capital to loans and advances.
3. Waiving the requirement for feasibility report as a pre-requisite for the establishment of rural branch.
4. Allowing the banks the monopoly period in a rural branch location.

For the efficiency of the programme, the central bank of Nigeria realizing that these commercial banks use a greater of the deposit realized from community banks using credit to urban dwellers issued directives in 1982 that at least 30% of the deposit derived from the rural areas must be ploughed back into the area.  This percentage was increased to 40% in 1984, to 45% in 1989 and according to 1990 monetary policy has been increased to 59% percent.

2.5.4  THE ROLE OF CBN IN EXPORT PROMOTION AND FINANCING OF COMMNITY MARKET.

According to A.D Udo (1982) “The central Bank of Nigeria’s involvement in export promotion has been essential in three areas viz direct and indirect financing of export, stipulation of guidelines to banks on export credit financing and development of export credit guarantee scheme”.

1. Financing of Export produce:

The central bank of Nigeria began to influence the financing of the export produce in the country when its strong support to the introduction of a bill finance scheme for the marketing boards to obtain funds by drawing 90 days bill of exchange on the Nigeria produce marketing company limited INPMC) later reorganized and remained the commodity boards in 1977.  To make the scheme workable central bank organized a financing consortium of commercial and merchant banks in the country to discount the marketing boards export produce bill after they had been accepted by the NPMC.

The central bank supported the scheme through the provision of liberal discounting, facilities to members of the consortium in respect of the board’s bills.  These rediscounting facilities were further extended to bills drawn on commercial banks and acceptance houses by reputable corporate or individual buying agents.  The CBN has consistently provided finance to the commodity boards since it was directed to do so in 1968.  such amount of credit stood at #685.7 million in (1968).  The new method require  the board to draw a bill not exceeding 75% of the value of the registered sales contracts.  These bills are then forwarded on acceptance to the federal ministry of agriculture which is responsible for commodity board matters.  In 1968, the federal government abolished the commercial bill finance scheme and entrusted the central bank of Nigeria the sole responsibility of providing financing to the marketing boards for their operations.  The financing scheme is by loan and advances from the CBN which are to be guaranteed by federal government.  The funds are to be guaranteed by federal government.  The funds are used to finance the boards operational expenses which include the cost of procuring produce from farmers allowance payable to licensed buying agents, charges for storage, transportation, insurance, handling and cost of equipment.

At the beginning of a produce season a borrowing board obtains from the federal ministry of finance, on application a guarantee for a given amount of loan with which to finance its marketing operations.  The amount of loan guaranteed is obtained on the basis of an eliminate of tonnage of produce to be purchased and the operational expenses on such purchases.  Therefore, the figure includes produce price and estimate expenses to be increase by the commodity board in buying the product.  When the CBN received the guarantee from the federal ministry of finance, it informs the commodity boards involved which then draws down the loan instalmentally as its purchase warrant.

1. Credit guidelines:

since 1969 the central bank of Nigeria has raplied on direct controls as its main instrument of monetary policy.  Between 1969 and 1977 monetary policy measures was adopted to reduce pressure on domestic price through ecouragement increased production of domestic goods and services.  Efferts were made advances were channeled to the productive sectors of the economy.  By April 1979, the export sub-sector of general commerce which hither to had been classified under the “less preferred sectors” was now made part of the preferred sector of the economy for which the prescribed targets are minimum.

It should be emphasized that the CBN had reduce the required minimum credit allocation to the exports sector on three occasions in the last give years mainly because of poor response to its directive on credit allocation to this sector by commercial banks commercial banks have persistently performed below target over the last several years.

Export credit guarantee scheme:

It has been assertaimed that a major factor responsible for the banking system is lack of cooperation with respect to various CBN’s supported measures on exports credit financing is the absence of a guarantee and insurance system for export transactions in the country, thus the need for introduction of this scheme.

Among the objective of the scheme in that of remeding existing defects in the system with regard to export and facilitating the extension of credit to foreign buyers of Nigeria made goods.  The scheme also aims at protecting banks and other financial institutions that extend credit to exporters.  And objective of the scheme is the provision of foreign exchange of pre-stupment financing of exporters.

The scheme has three basic operational features:

1. A credit guarantee fund designed to provide preshipment financing for the production of goods destined for export.
2. A credit insurance fund designed to support post shipment financing under which the exporters extends credit on competitive terms to importers in other countries, the fund also protects the exporters against the risk of default by foreign importer and

• A foreign exchange revolving fund which will provide foreign exchange resources to meet the raw materials needs of exporters.
  • CREDIT GUIDELINE IN RELATION TO NIGERIA AGRICULTURE

The commercial bank have felt reluctant to grant loans to the agricultural sector of the economy.  The reluctancy of these banks to responde to the CBN directives emanuated from the liability structure of their fund.  This is because of the fact that agricultural produce involves a long term investment example properties material and other inputs.  Because commercial banks derive the bulk of their loadable funds from short term sources like current account saving it becomes difficult.

Thus without compulsory central bank credit guidelines with approprate sanctions for default, the volume of commercial bank loans to this sector would be very slow.

To this end, the CBN has continued to give guidelines in relation to agricultural financing.  These guidelines are in areas of sectoral distribution of loans and advances; loans to rural areas.  Grace periods or agricultural loans.  These policy measures are continuously adjusted depending on the aim intended to achieve.

• CBN AND AGRICULTURAL FINANCE THROUGH A SPECIAL DEVELOPMENT INSTITUTION (NACB)

The background of establisting the NACB lay in the inadequency of the banking system in the effective mobilization of funds for agriculture”.  The Nigeria Agricultural bank was registered as a limited liabilities company on November 24, 1972.  under the company’s decree 1968 and was officially inaugurated on the 6^th March 1973.  this marked the fulfillment of a long standing need in the field of agricultural development.

In 1978 the Nigeria Agricultural Bank NAB was renamed Nigerian Agricultural and cooperative Bank limited (NACB).  It remained wholly owned by the federal government until 1979 when the paid up capital for the bank was increased to #150m and the CBN subscribed for 40% of the fund while the federal government subscribed for 60%.  This automatically made the CBN a joint owner of the Nigerian cooperative bank.

The federal government was only source of fund for the (NACB) at the inception.  But at present, five major sources can be identified. This includes the central bank of Nigeria short fall from agricultural credit guarantee scheme, capital market and the consultancy services provided by the bank.

The main objectives for the furmation of the bank include the following:

1. To enahce the level and quality of agricultural production and storage.
2. To charge interest on loans to meet the full cost of management including debts servicing allowing adequate sums to be set aside for general and bad debts reserves before paying any dividend.

• To grant direct loan to individual farmers cooperative societies or other bodies (corporate or incorporate).

1. To grant loan to any stares or its institutions for on lending to any farmer group of farmers, or body corporate subject to the state or group of states or state institution guaranteeing repayment of loan.
2. To lend or advance money or give credit upon the security of real or personal property of every descripotion the main purpose however are intended to support the federal government polices of.
3. Production of food in enough quantity and quality to feed the growing population

• Provide raw material for home industries and export.
• Enhancing employment opportunities the country by generating income and thus create greater and effective demand for goods and services.

The NACB limited provides approved funds to farmers for agricultural production through the following programme

1. Direct lending
2. On lending

• Small holders direct loan scheme.

• THE C.B.N AND ITS OBJECTIVES AND FUNCTIONS.

The functions of CBN are set out in the bank statues and be classified under two main heading.  The traditional functions and the development functions.  This can be classified into three main headings:  the inside functions” The central Bank of Nigeria, like most other central banks in the world over, performs certain raditional functions.  These includes issuing of legal tender currency in Nigeria, acting as banker and financial adviser to the federal government, provision of banking services to other banks and financial institutions.  The promotion of monetary stability and sound financial structure in Nigeria and maintenance of the external resources.  A detail discussion of these functions are discussed below:

• ISSUING OF CURRENCY

The legal tender are the currency notes and coins that are used in Nigeria as the legal means of payments units of account and store of value.  Today, we use the naire and kobo as the means of payment in Nigeria and only the central bank of Nigeria has the sole right to mint and issue them.  The bank arranges for the currency notes and the minting of coins whose units denominations forms has been approved by the federal government.  The central bank distributes these currencies to the public through the commercial banks and also through these banks withdrawal in circulating the currency notes that are dirty and mutilated.

The first trebly Nigeria currency was issued on 1^st July 1950, the day the central bank of Nigeria was officially opened.  At that time the WACB notes (which were the notes in circulation)were denomination of Nigeria currency in circulation today are 50k, #1, #5, #10, #20, #50, #100, #200 and #500.

• BANKER AND FINANCIAL ADVISER TO THE GOVERNMENT

The central bank of is both a banker and financial adviser to the federal government.  It receives deposit and makes payment on behalf of the government.  It also provide banking service for the state government as well as various quasi government institutions and parastatals.  Following the may  28, 1989 order by the federal government the role of CBN as banker and financial adviser has been externded to government parastatls, ministries and firm.

The central bank is required by law to make tempora advances to the federal government.  The granting of this type of facilities called for “way and means advances” is to assist the federal governement meet temporary budgetary deficit.

It also issue and underwite debts instruments on behald of the governmental.  These instruments includes, the short term and long term securities, the treasury bill, treasury certificate and development stocks.

The role of the CBN as financial and economic adviser to the federal government is a very crucial one and this has lately been re-emphases by 1979 constitution which includes the governor of the central bank as a member of the national economic council (NEC).

2.6.3  BANKER TO AND SUPERVISOR OF BANKS AND OTHER FINANCIAL INSTITUTIONS

The central bank of Nigeria acts as banker to commercial bank, merchant banks development banks and other financial institution. Every bank in Nigeria keeps an account with the central bank. Strictly speaking, this is not a statutory requirement but rather a necessity, as no bank can operate successfully without having some business relationship with other banks. Such business relationship transactions invariably result in one form of inter bank settlement or the other so are best handled through the central bank.

As the central bank stands at the apex of the banking system in Nigeria, it shoulders the statutory responsibility for promoting a sound financial structure and ensuring that the operations of bank and other financial institution are kept within the provision of the law. The banking act 1969 as mended in 1979 and the series of monetary policy circulars issued by the central bank at the beginning of each government fiscal year. Contain a number of regulations and directives for banking operations in the country. Some of the areas covered include liquidity rations, interest rate structure and sectional allocation of loans and advances.

The supervision department of the central bank pays periodic visits to all banks to examine and scrutinize their books, in oider to ensure that banking regulation re not contravened. The banks themselves are also required to render bi-monthly, monthly and annual returns to the central bank. These includes a monthly statement of assets and liabilities (first schedule) monthly reports on loans and advances (second schedules) the Annual profit and loss (third schedules) the auditors report (fourth schedules) and the auditors analysis of doubtful advances (fifth  schedule)closely identified with this role of the central bank is the role “lender of last resort” as the name implies, too, this is just the process where by the commercial banks go to borrow money from the central bank when they are short of cash  as a result of customers withdrawing ther deposit with the banks.  The central bank can make cash available for a short period in either of the two ways by lending cash directly charging a rate, by lending cash directly charging a rate, or by buying approval short term securities from the commercial banks, unlike the traditional “Open market operation”.  This cash is made available at the request of the commercial banks and on their initiative in the case of the open market operations.  It is the central bank which takes the initiative  of buying or selling securities.

• THE ORGANISATIONAL STRUCTURE OF THE CBN AND ITS AGRICULTURAL FINANCE DEVELOPMENT

27, In discussing the financial relationship of the central bank of Nigeria stated that the functions of CBN are performed by various specialized departments working under the overall control of the board of directors.  Also the CBN act of 1958 stated that “there shall be a board of Directors of the bank which shall be responsible for the policy and the general administration of the affairs and business of bank.

Initially, the board of directors consisted of a governor, a deputy governor were responsible for the day to day management of the bank.  The governor relied on the heads of departments to carry out these duties, and held meeting with them daily to discuss policy matters and reviewed operational procedures.  After the approval of the reports of the international inc.  in 1976, the size of board membership was increased to thirteen (13) the thirteen board members is made up of the governor the duty governor, three excusive directors and eight other directors, all of whom are appointed by the federal government for five years (in the case of the governor this deputy and the executive directors) and three years for the other directors.

At the commcement of the bank operation, it was organized into two departments only the general managers and the secretary’s departments and it was not until 1960 that the neclus of research department came into being the emphsis in the early stage was necessary on the operational and function side of the bank’s affairs which absorbed the efforts of the trained personal available.

The three departments later in 1967 grew tofive, adding audit andbank examination departments.the former general mangers department change its name to banking operations department in 1967 and 1975 the departments were the security department was divided into personnel and administration departments.

With the acceptance of the mickansay recommendations, a new structure are introduced where by the existing departments were re-organized as follows: domestic operational financial system and control research, exchange control, banking supervision foreign operations agricultural finance, administration personnel and governments office.  These ten departments were divided into three groups and each group is assigned to executive directors.  The group are:

1. Operations group: this is made up of domestic operations exchange control; agricultural finance, and foreign operations.
2. Monetary and banking policy group: this is made up of the following research, bank supervision.
3. Management and staff service group: this is made up of administration, personnel and financial system and control while the governor ‘s office reports directly to the governor. The agricultural finance department is one of the ten department which was created in 1977 in recognition of the  ten department which was created in 1977 in recognition of the increasing role of bank in agricultural development. role of bank in agriculatural credit guarantee scheme which was established in 1977 by the federal government and the CBN with a capital of #100million.

The organization f the agricultural finance department is intended to achieve a successful implementation of agricultural credit guarantee scheme.  At the head of each of the department is a direct to.  It is further divided into two each of which is headed by a deputy director who is responsible to the director under the directors, there are the assistant directors and managers who man respective, offices, they are closely followed by the sernor supervisors who are the agricultural credit officers and  a number of clerical staff.  The bank has established agricultural credit officers in all the central bank branch and sub-centres in all the hirty –six state including Abuja.  Each office in the state is manned by agriculture officers who not only guarantee the loan granted by the commercial banks also with the commercial bank agriculture officers send the reports of the activities monthly to th head office where they are coordinationated.  The head officer ascertains from the reports, the overall performance of each state and advise them accordingly occasionally, the directors sends official to the states to visit, assist and advise farmers who are benfiting under  the scheme. (for the chart of the CBN see figure I below).

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