Determinants of Credit Access by Small Scale Farmers in Dekina Local Government Area of Kogi State, Nigeria

Subject Areas : Agricultural Extension

Sunday Onalo  Adejoh ¹ (Department of Agricultural Economics and Extension, Faculty of Agriculture, Kogi State University Anyigba, Nigeria)
Obe Christopher  Adah ² (Department of Agricultural Education, Kogi State College Of Education Ankpa, Nigeria)

Received: 2017-09-27 Accepted : 2018-04-27 Published : 2018-06-01

Keywords: Credit, Income, Logit, Formal, Informal,

Abstract :

This study is on the determinants of credit access by small scale farmers in Dekina Local Government Area of Kogi State, Nigeria. The specific objectives are to; identify the major source of credit among the small scale farmers; estimate the determinants of farmers’ access to formal credit; compare the farm income of farmers who have access to formal credit and those who have not and identify constraints to farmers’ access to credit. A total of 120 respondents was selected through random sampling technique. Primary data obtained through questionnaire administration were analysed using descriptive statistics, binary logistic regression model, t-test and mean score. Findings of this study revealed that the major source of credit to finance agricultural production was the informal credit source-money lenders (76.7%). Estimates of the binary logit regression model revealed a significant chi-squared value at 1%. The marginal effect of membership of cooperative society, experience, farm size, extension contact and distance to credit source significantly determined the probability of small scale farmers’ access to credit at 5%. Expectedly, farmers who had access to formal credit recorded significant increase in farm income to those who had not. Constraints to farmers’ access to formal credit source include inadequate collateral security (mean score=2.9), bureaucracy (mean score=2.8), high interest rate (mean score=2.7). That of informal credit source included high interest rate (mean score=2.6) and low level of lending (mean score=2.5). The study recommended deliberate policy to ensure that rural farmers have access to adequate credit facilities for improved agricultural production.

References:

1. Abu, G. A, Odoemenem, I. U. and Ocholi, A. (2011). Determining optimum farm credit need of small scale farmers in Benue State. Journal of Economics and International Finance, 3 (10): 564–570.


2. Adebayo O. O, Adeola, R.G. (2008). Sources and uses of agricultural credit by small scale farmers in Surulere Local Government Area of Oyo State. Anthropologist, 10(4): 313-314.


3. Adugna, T. and Heidhues, F. (2000). Determinants of farm households access to informal credit in Lume district, central Ethiopia. Savings and Development, 24 (4): 27 – 46.


4. Ammani, A. A.,  Alamu. J. F  and Kudi, Y. M. (2011). Input supply and Development of Commercial Agriculture in Nigeria. International Journal of Agriculture and Forestry,12: 46- 52


5. Atieno, R. (2001). Formal and informal institutions’ lending policies and access to credit by small-scale enterprises in Keya: An empirical assessment. African Economic Research Constortium, Nairobi. 1:9


6. Dayo, P., Ephraim, N., Jonh, P. and Omobowale, A. O. (2009). Constraints to Increasing Agricultural Productivity in Nigeria: A Review. IFPRI Background Paper No. NSSP 006, Septmeber, 2009.


7. Deaton, A. (1997). The Analysis of Household Surveys: A Micro – econometric Approach to Development Policy. Baltimore: John Hopkins University Press. P, 85.


8. Ibitoye, S. J. and Omojola, D. Omojeso, V. B.  and Shaibu, U. M. (2015). Assessment of Informal Credit in Mobilizing Funds for Agricultural Production in Ijumu Local Government Area of Kogi State, Nigeria. Asian Journal of Agricultural Extension, Economics & Sociology, 7(1): 1-8, 2015.


9. Ibitoye, S. J., Audu, S. I., Shaibu, U. M. & Adejoh, R. O. (2016). Assessing the Influence of Agricultural Credit Guarantee Scheme Fund on Farm Income of Crop Farmers in Dekina Local Government Area of Kogi State, Nigeria. Paper Presented at Nigerian Association of Agricultural Economists 17th Annual National Conference at Federal University of Technology, Owerri. P, 169 – 173 

10. Idachaba, F. S. (2006). Rural development in Nigeria: Foundations of sustainable economic development. Ife Journal of Agriculture, 8: 111 – 118.

11. Lawal, J . O., Omonona, B. T., Ajani, O. I., and Oni, A. O. (2009). Effects of Social Capital on credit Access among Cocoa Farming Households in Osun State, Nigeria. Agricultural Journal, (4): 184–191.

12. Mohieldin, S. and Write, W. (2000). Formal and informal credit markets in Egypt. Center for economic policy research and University of Nottingham.

13. Oboh, V. U, and Kushwaha, S. (2009). Socio-economic determinants of farmers’ loan size in Benue state, Nigeria. Journal of Applied Sciences Research, 5(4): 354-358.   

14. Ololade, R. A., and Olagunju, F. I. (2013). Determinants of Access to Credit among Rural Farmers in Oyo State, Nigeria. Global Journal of Science Frontier Research, 13(2):100-110

15. Olomola, A. S. (2008). Agricultural Finance. In A.O Phillips and S. TunjiTitilola (eds.), Nigeria in 2010, NISER, Ibadan. P, 51-62.

16. Oni, A. O, Adepoju, O. A, and Opawole, O. (2011). Socio Economic Characteristics, Micro-Credit and Technical Efficiency of Poultry Farmers in Lagelu Local Government Area of Oyo State, Nigeria, African Journal of Livestock Extensio. 9(1):109 - 114

17. Saleem, A. M, and Jan, A. F. (2011). The Impact of Agricultural Credit on Agricultural Productivity in Dera Ismail Khan (District) Khyber Pakhtonkhawa Pakistan, Euro. Journal of Business Management 3(2): 1– 8.

18. Sharma, M. (2000). The scope of policy reforms in rural microfinance. Policy Brief No 14: Rural Financial Policies for Food Security of the Poor. Washington D. C.: International Food Policy Research Institute.

19. Udry, C. (2000). Credit Markets in Northern Nigeria: Credit as Insurance in Rural Economy. World Bank Economic Review, 4(3): 251 – 269.

20. Ugbajah, M. O. (2011) Gender Analysis of the Structure and Effects of Access to Financial Services among Rural Farmers in Anambra State, Nigeria. Journal of Agricultural Science 2(2): 107-111.

21. Zeller, M. (2004). Determinants of credit rationing: a study of informal lenders and formal credit groups in Madagascar. FCND discussion paper, No. 2, IFPRI, Washington DC.