Impact of Agricultural Credit Guarantee Scheme Fund (ACGSF) on livestock production in Nigeria: Evidence from historical data

Abstract

This study examined the causal relationship between Agricultural Credit Guarantee Scheme Fund (ACGSF) and total livestock production in Nigeria, using annual time series data on annual amount of ACGSF guaranteed and total livestock output spanning from 1981 to 2014. Augmented Dickey-Fuller (ADF) test, Johansen cointegration test, vector error correction model (VECM), granger causality test and variance decomposition were employed for data analysis. The results from ADF test showed that the series are integrated of order one, I(1). Johansen cointegration test showed that there is a long-run relationship between the variables. The estimates of the VECM showed that ACGSF had a positive and significant effect on livestock production at 1 percent level in the first lag with a coefficient of 0. 271. It was also found to be significant at 5 percent level in the second and third lags with a coefficient of 0.189 and 0.171 respectively in the short-run. Also the variance decomposition analyses showed that over time, ACGSF contributed about 31 percent to the improvement in livestock production in Nigeria. Further, based on Granger causality test, there was a unidirectional causality from ACGSF to livestock production. This study affirms that ACGSF remains relevant for the purpose for which it was established. Given that ACGSF had significant and positive effects on Livestock production in Nigeria, to further enhance its impact, government should ensure that more funds to the sector is quaranteed to enhance increase productivity of the sector.