Assessing the Moderating Role of Agricultural Credit Guarantee Scheme Fund in the Inflation - Poverty Nexus in Nigeria

Abstract

The depth of poverty in any society is proportional to inflationary trends, ceteris paribus. The current rising rate of inflation in Nigeria and its pervasive effects on the economy is therefore a crucial issue for national concern that needs to be investigated. This paper examined whether ACGSF is a significant moderator in the inflation – poverty nexus in Nigeria within the study period of 1976 and 2023. Ex-post facto design was adopted. Data were sourced from CBN annual statistical bulletin, the National Bureau of Statistics, the World Bank and Federal Ministry of Agriculture and Rural Development. Non- linear Auto-Regressive Distributed Lag (NARDL) model and Hierarchical Multiple Regression (HMR) were adopted for data analysis. NARDL was preferred for its ability to overcome the endogeneity problem inherent in Engle-Granger method that makes it impossible to test hypothesis on the limited Coefficient in the long run while HMR was adopted due to its ability to moderate the effect of the regressor on the regressed when the moderating variable of interest is introduced. Study findings revealed that both consumer price index (CPI) and Agricultural Credit Guarantee Scheme Fund (ACGSF) have no significant effect on poverty in Nigeria. Thus, CPI did not worsen the spate of poverty, especially on agricultural products. Yet, funding of agricultural production through the Agricultural Credit Guarantee Scheme Fund has not been sufficient to pull beneficiaries out of poverty since the ACGSF loans were not adequate for farmers to increase output in Nigeria. The paper recommended that the Federal Ministry of Finance should leverage on consumer price index as a tool for poverty reduction as it contributes positively to increase in the depth of poverty in Nigeria. Also, the Central Bank of Nigeria should intensify efforts at disbursing Agricultural Credit Guarantee Scheme Fund to rural farmers who constitute a vast majority of poor farmers in Nigeria.