This study focused on microfinance credit and agricultural sector output in Nigeria. The main objective is to examine the effect of microfinance credit on agricultural sector output in Nigeria. The specific objectives are to find out the effect of microfinance loan, microfinance deposit and shareholder’s fund on agricultural sector output in Nigeria. The data were obtained from Central Bank of Nigeria Statistical Bulletin for the period 1992 to 2019. The Autoregressive Distributive Lag approach which is apt for data with mixed order of integration was employed to regress the microfinance credit variables on agricultural sector output which is the dependent variable The empirical analyses revealed that microfinance loans and microfinance deposits had a positive effect on Agricultural sector output while shareholders fund had negative effect on agricultural sector output in Nigeria. This work indicates that microfinance credit has only short run effect on Agricultural sector output in Nigeria. These findings depict among others that the micro financing hub of the financial system is capable of driving short term investment needs of the agricultural sector. The study recommends that an enabling environment capable of supporting the microfinance banks in microcredit delivery should be provided. This can be achieved by government, through mandating the CBN to undertake the responsibility of writing off at least 50% of losses incurred by micro finance institutions in an attempt to extend credits to rural dwellers who essentially engage in agriculture. They should also ensure that agricultural inputs which are made available to the rural farmers get to them not to the politicians and civil servants.
Microfinance, Credit, Loan, Deposit, Agriculture
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