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Analysis of Credit demand by Smallholder Farmers in Bende Local Government Area of Abia State

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  • Ahamefule, B.A.
  • Uzochukwu, C.O.
  • Offor, E.I.

Abstract

The study analyzed the credit demand by small holder farmers and was carried out in Bende L.G.A of Abia State , South Eastern Nigeria . A multi stage sampling procedure was used for the study in the selection of 90 smallholder farmers. Data were collected using structured questionnaire. Descriptive statistical tools, multiple regression and Probit models were employed in the data analysis. The result shows that the mean age of the respondents was 43.5 years 62.16% were female and majority (54.39%) were married. Meanwhile, 48.84% had no formal education with mean household size of 6.3 and did not belong to any social group. The result on volume of credit demanded showed that majority applied for loan within ₦51,000 100,000. Regression results of factors affecting volume of credit demanded showed that the coefficient for age, educational level, household size, farming experience, interest rate, loan transaction cost and annual income were all significant at 1%, 5%, 1%, 1%, 5%, 1%, and 5% respectively. The Probit regression result shows that increasing household size (1%), profit gain from loan (1%), and having multiple income sources (1%) all affect the farmer’s capacity to repay borrowed funds. Some of the problems encountered by small holder farmers in accessing credit from formal and informal sources include, high interest rate, short repayment time, spending a lot of time before getting the credit, inadequate collateral, lack of banks in the rural areas and complex bank procedure. The study therefore recommends that the farmers should be enlightened about the existence of formal agricultural credits and ways to access them. Measures should be put in place to monitor, check and reduce the misappropriation of agricultural credit by beneficiaries. Lastly, the problem of delay in disbursement of loans/credit to farmers should be properly addressed.

Suggested Citation

  • Ahamefule, B.A. & Uzochukwu, C.O. & Offor, E.I., 2018. "Analysis of Credit demand by Smallholder Farmers in Bende Local Government Area of Abia State," Nigerian Agricultural Policy Research Journal (NAPReJ), Agricultural Policy Research Network (APRNet), vol. 5(1), September.
  • Handle: RePEc:ags:naprej:313831
    DOI: 10.22004/ag.econ.313831
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    References listed on IDEAS

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    1. Ernest Aryeetey & Hemamala Hettige & Machiko Nissanke & William Steel, 1997. "Informal Financial Markets and Financial Intermediation in Four African Countries," World Bank Publications - Reports 9945, The World Bank Group.
    2. Okoye, B.C & Onyenweaku, C.E & Ukoha, O.O, 2010. "An Ordered Probit Model Analysis of Transaction Costs and Market Participation by Small-Holder Cassava Farmers in South-Eastern Nigeria," MPRA Paper 26114, University Library of Munich, Germany.
    3. Steel, William F. & Aryeetey, Ernest & Hettige, Hemamala & Nissanke, Machiko, 1997. "Informal financial markets under liberalization in four African countries," World Development, Elsevier, vol. 25(5), pages 817-830, May.
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    Agricultural Finance;

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