COCOA PRODUCTION AGRICULTURAL CREDIT GUARANTEE SCHEME FUND NEXUS IN NIGERIA: A COINTEGRATION APPROACH

This study was carried out to examine the relationship between cocoa production in Nigeria and agricultural credit guarantee scheme fund using time series data on cocoa production in Nigeria, value of loans guaranteed and number of loans guaranteed spanning over the period of 1981 to 2011. The Johansen cointegration test was employed in this study and the result indicated that there was no cointegrating relationship between cocoa production in Nigeria and Agricultural credit guarantee scheme fund over the period under study. This could be attributed to the guaranteeing of few number as well as limited value of credit to the farmers by agricultural credit guarantee scheme fund and the high incidence of loan diversion by the cocoa farmers who had access to the loans guaranteed by agricultural credit guarantee scheme fund. It is recommended that the number as well as the value of credit guaranteed to cocoa farmers should be significantly increased so as to enable the farmers expand their production and thereby, reposition the cocoa to assume a critical role as a major non-oil foreign exchange earner in the Agricultural transformation plan of Nigeria.