AGRICULTURAL CREDIT GUARANTEES SCHEME, INFLATION DYNAMICS AND POVERTY NEXUS IN NIGERIA

Abstract

This study investigates the moderating influence of the Agricultural Credit Guarantee Scheme Fund on the relationship between inflation and poverty in Nigeria over the period 1986-2025. Rising inflation has continued to reduce household purchasing power and worsen poverty, especially among rural farming households, thereby making inflation management a critical policy concern. The study specifically examines whether agricultural credit support can cushion the adverse effects of inflation on poverty reduction. Annual time-series data were sourced from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), World Development Indicators (WDI), and the Federal Ministry of Agriculture and Rural Development. This study employs the Non linear Autoregressive Distributed Lag (NARDL) model to capture asymmetric short run relationships among poverty, inflation proxied by the Consumer Price Index (CPI), and ACGSF. The ADF unit root test indicated mixed orders of integration, while the Wald test confirmed significant short run asymmetry. However, the Bounds Cointegration Test revealed that no long run relationship among the variables, as the F-statistic (1.8099) fell below the 5% critical bounds. The findings indicate that positive inflation shocks significantly increased poverty by 43.6%, whereas negative inflation shocks reduced poverty by 35.7%. In contrast, the coefficients of ACGSF were positive but statistically insignificant, implying limited effectiveness in reducing poverty. Diagnostic tests confirmed the absence of serial correlation, heteroskedasticity, and model misspecification. The study recommends stronger inflation control policies, improved agricultural credit targeting, and coordinated rural development interventions to enhance poverty reduction in Nigeria.