Impact of Selected Macroeconomic Variables On Agricultural Sector Credit in Nigeria (1981–2024)

Abstract

-The agricultural sector remains a cornerstone of Nigeria’s economy, contributing to national output, employment, food security, and domestic and export market activities. However, agricultural credit remains constrained by financing costs and macroeconomic instability. This study examined the effects of minimum lending rate by commercial banks to agriculture, monetary policy rate, average exchange rate, and consumer price index on agricultural sector credit in Nigeria over 1981 – 2024. Annual secondary data were obtained from the Central Bank of Nigeria Statistical Bulletin (2025), and the Dynamic Ordinary Least Squares (DOLS) estimator was employed to examine the long-run relationship among the variables. The results show that minimum lending rate is negatively related to agricultural sector credit, although the coefficient is statistically insignificant. Monetary policy rate also has a negative long-run relationship with agricultural sector credit. Exchange rate has a negative and statistically insignificant effect, while consumer price index has a positive and statistically significant long-run effect. Specifically, a one-percentage-point increase in minimum lending rate, monetary policy rate, exchange rate, and consumer price index is associated with approximately 0.057%, 0.221%, 0.001%, and 0.168% changes in agricultural sector credit, respectively, holding other variables constant. The study recommends measures that improve access to affordable agricultural credit, strengthen monetary-policy transmission, promote exchange-rate stability, and reduce input-price volatility.