Analysis of Loan Acquisition and Repayment among Small Scale Rice Farmers in Ebonyi State, Nigeria: Implication for Effective Credit Delivery.

Abstract

Loan acquisition and repayment among small scale rice farmers in Ebonyi State, Nigeria was investigated. The study determined the quantum of loan sourced and acquired by small scale rice farmers; ascertained the determinants of successful loan acquisition from formal financial institutions; estimated the repayment rates among the beneficiaries; and analyzed factors that affect loan repayment performance of the beneficiaries. A multistage simple random sampling technique was adopted in the selection of the respondents. Primary data were generated through the use of well structured questionnaire admitted to 120 small scale rice farmer beneficiaries. Descriptive statistics, multiple regression and logit regression model were employed in data analysis. Analysis revealed that each of the farmers applied for an average amount of N170,173.40 but was able to procure an average amount of N128, 557.40. Furthermore, multiple regression result indicated that farm size, cost of farm inputs and interest charge were significant in determining loan acquisition. An average of 28% of respondents defaulted in loan repayment. The logit regression indicated that farming experience, income, interest charge, loan application cost, loan size, security and number of installments were found to have played significant role in loan repayment performance. The study therefore, recommended that a sustainable credit policy framework be established by relevant agencies to enable farmers access adequate loan amount at reduced interest rate and also on time from formal financial institutions.