ABSTRACT:

The operations of Nigeria’s Agricultural Credit Guarantee Scheme Fund (ACGSF), after twenty-seven years, were subjected to macro econometric analysis, presumably the first quantitative approach to the scheme, with the objective of providing useful results, deducing policy implications, and perhaps, policy options. Specifically, the volume by number and value of loans guaranteed and repaid, with the addition of a credit-determining policy instrument, were modelled using vector autoregression (VAR) methodology to evaluate the economic information they contain and their relevance in terms of policy analysis. The value of loans guaranteed was identified to be positively related to the number of loans guaranteed and the number and value of loans repaid, and inversely related to the policy instrument. In this light, the managers of the scheme need to step up and encourage vigorous repayment of loans under the guarantee and develop capacity to process and approve guarantees and default claims on-line. Beyond these, the monetary policy regulating institution is urged to adopt forward looking rules, example, by encouraging participating banks to access the discount window at favourable terms, that do not directly or indirectly infringe on the expressed aims of the ACGSF, say, in its attempt at affecting the liquidity (interest rate) and/ or credit channels of monetary transmission.