Determinants of loan repayment among agricultural beneficiaries of public funded credit scheme in Ekiti State, Nigeria

ABSTRACT

To cater for the credit needs of the farming population, the Ekiti State Government established Ekiti State Multipurpose Credit Agency (ESMA). This study examined the factors influencing repayment of loan obtained from this agency by the smallholder agricultural loan beneficiaries. Primary and secondary data were used for the study and analysed using descriptive statistics, Tobit regression and the t-test of means. Loan repayment was found to be influenced by age of the famer (p < 0.01), household size (p < 0.05), amount of loan obtained (p < 0.01), amount of loan invested in non-farm activities (p < 0.01), farm income (p < 0.01), income from other sources (p < 0.01), credit use experience (p < 0.05) and price stability (p < 0.10). It is therefore recommended that ESMA should consider carefully farmers’ credit use experience in loan disbursement. Furthermore, farmers should be enlightened on marketing practices that would add extra value to their produce to increase their farm income.

KEYWORDS:

• Loan beneficiaries
• repayment
• smallholder crop farmers
• micro credit
• credit agency

Acknowledgement

I want to thank all the staff of Ekiti State Multipurpose Credit Agency (ESMA), especially Mr Alade and Mr Arabi for the support you gave me during the data collection. God bless you.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Folasade Rotimi

Folasade Rotimi is an agricultural economist who is passionate about research with a keen interest in food security and agribusiness related issues as tools for evidence-based policymaking and advocacy in agriculture. She has hands-on experience in both quantitative and qualitative agricultural economics research and works as an Agribusiness Officer with the Ministry of Agriculture and Food Security in Ekiti State, Nigeria.

Solomon Olubiyo

Solomon Olubiyo was the Head of Department and Senior Lecturer at the Department of Economics, Federal University of Agriculture Abeokuta, Nigeria before his passing.

Mure Agbonlahor

Dr Mure Agbonlahor is a senior agricultural production and marketing policy officer with the African Union Commission (AUC). He is an Agricultural and Development Economist by training and worked as a teacher and researcher in several African Universities before joining the AUC. He is presently the lead in the domestication of the African Union' Framework for Irrigation Development and Agricultural Water Management Practices. Dr Agbonlahor is also the lead officer in charge of elaborating and supporting the domestication of the African Union's Guidelines for inclusive agricultural value chains development in Africa.

Stephen Adeogun

Stephen Adeogun is a Professor of Agri-Human Resource Management with a special interest in rural sociology and training. He works at the Federal University of Agriculture Abeokuta, Nigeria and consults for many national and international organisations on agribusiness related issue.