Impact of the Commercial Agriculture Credit Scheme on the Performance of Beneficiaries in Anambra State Nigeria

ABSTRACT 

The study examined the impact of Commercial Agriculture credit scheme on the performance of beneficiaries in Anambra State, Nigeria. Simple random sampling technique was applied in selection of respondents for the study. The sample was drawn from members of All Farmers Association of Nigeria (AFAN). AFAN has a total of 548 members, out of this member 200 of them have so far benefited from the scheme while 348 are yet to benefit. Thus from 200 beneficiaries, 150 were randomly selected. 150 farmers were also selected from those that have not benefited and this gave a total of 300 farmers for the study. The data were analyzed using descriptive statistics, propensity score matching and probit model. Results of the data analysis showed that the average age of farmers was 47 years, majority (67.2%) were male while 32.8% were females. Majority (66.8%) of the farmers were married. The farmers spent 11 years in school on the average. Average household size was 5 persons while 10 years was their average farming experience. The farmers have average farm size of 525.03 ha. 99.2% of them own bank account and majority of them agreed they needed credit in their farming business. The result further showed that personal saving and cooperatives were their major source of credit. The mean capital base of the farmers was N 1,500,000. 66% of the farmers that accessed the loan engaged in crop production while 30% and 4% of the farmers that accessed the loan engaged in livestock and agromarketing respectively. The t-cal (2.19) was greater than the t-tab (1.96). This result implies that the Commercial Agriculture Credit Scheme (CACS) has had a significant positive impact on the output of the beneficiaries. For the regression result, increase in the profit of the farmers after accessing the CACS, amount received from CACS, capital base of the farmers , farm size of their farms, years of experience, education level of the farmers and output of the farmers increased farmers ability to repay the loan borrowed. The result of the analysis further shows that the farmers accepted the lack of awareness and access to the scheme due to delays as well as stringent measures by participating banks, collateral requirements and farmers education levels were the major problems encountered by the farmers but agreed weakly to lack of awareness as a problem encountered by farmers in accessing the scheme.

TABLE OF CONTENTS

TITLE PAGE i

CERTIFICATION ii

DEDICATION iii

ACKNOWLEDGEMENT iv

ABSTRACT v

TABLE OF CONTENTS vi

LIST OF TABLES vii

CHAPTER ONE: INTRODUCTION

1.1: Background Information 1

1.2: Statement of the Problem 3

1.3: Objectives of the Study 4

1.4: Hypotheses of the Study 5

1.5: Justification of the Study 5

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1.1: Agricultural Financing in Nigeria 7

2.1.2: Credit and Agricultural Credit 8

2.2: Interventions of CBN in agricultural financing 9

2.3: CBN Commercial Agricultural Credit Scheme Performance in the Country 11

2.4: The Challenges of Agro-Credit Disbursement 12

2.5: Sources of Agricultural Credit 14

2.6: Credit Administration and Use 15

2.7: Credit Risk 16

2.8: Credit Accessibility 17

2.9: Credit Repayment 19

2.10: Impact of Credit and Determinants of Repayment 21

2.11: Theoretical Framework 23

2.12: Analytical Framework 27

CHAPTER THREE: METHODOLOGY

3.1: Area of the Study 31

3.2: Sampling Procedure 32

3.3: Method of Data Collection 32

3.4: Validity and Reliability of Instrument 33

3.5: Method of Data Analysis 33

3.5.1 Propensity Score Matching Model 33

3.5.2 Probit Model 37

CHAPTER FOUR: RESULTS AND DISCUSSIONS

4.1 Socio economic characteristics of the farmers 41

4.1.1 Gender of farmers 44

4.1.2: Household size of farmers 44

4.1.3: Age of farmers 45

4.1.4: Highest education qualification of farmers 45

4.1.5: Ownership of bank account by farmers 45

4.1.6: Marital status of farmers 45

4.1.7: Years of the farming experience 45

4.1.8: Farm size of the farmer 46

4.1.9: Capital base 46

4.1.10: Need of credit 46

4.1.11: Credit sources of farmers 46

4.1.12: Kind of labour used 47

4.2: Use of commercial agriculture credit scheme loans by farmers 47

4.3: Impact of commercial agriculture credit scheme on farmers output 49

4.4: Factors that determine farmers loan repayment performance 53

4.5: Problems encountered by farmers in accessing the scheme 57

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1: Summary of the findings 60

5.2: Recommendation 62

5.3:Conclusion 63

References 64

Appendix 1: questionnaire 70-74