Analysis of Rural Farm Households' Access to Formal Agricultural Credit in Yola South Local Government Area, Adamawa State, Nigeria

Abstract

The purpose of this study was to analyse rural farm households’ access to formal agricultural credit in Yola South Local Government Area of Adamawa state, Nigeria. Descriptive and inferential statistics were used to analyse the primary data collected using structured questionnaire (from 140 rural farming households). Findings from the study have shown that, 90 % of the respondents were male, mostly educated (70 %) and married (89 %) engaging in farming as their primary livelihood activity (about 81 %) with an average farm size of 2.47 hectares. The result of the binary logit regression has shown that level of education and income do influence access to credit positively, while age and distance to access point negatively influence respondents’ access to formal credit. The study further revealed that, lack of acceptable collateral / security, high interest rates, low financial literacy, and complex banking procedures were the main factors that limits the respondents’ access to credit facility from formal sources. In order for farmers to have an improved access to formal credits, the formation of strong groups that are viable to provide the needed capital is encouraged, banking operations should be simplified to suite farmers’ needs / convenience and financial literacy among farmers should be improved through awareness campaigns (in agricultural extension packages).

Urgently strategic insights to resolve the Nigerian food security crisis

“…The consensus was that there is a lack of finance or access to credit for the farmers. This finding was consistent with other relevant existing literature (Michael et al, 2018; Ndubueze-Ogaraku and Andamadi, 2017; Osa-Afiana and Kelikume, 2016; Yustus et al, 2018). Michael et al (2018) concluded the financial credit problem was due to a lack of acceptable collateral, high interest rates, low financial literacy and complex prevailing banking procedures.…”

“…This finding was consistent with other relevant existing literature (Michael et al, 2018; Ndubueze-Ogaraku and Andamadi, 2017; Osa-Afiana and Kelikume, 2016; Yustus et al, 2018). Michael et al (2018) concluded the financial credit problem was due to a lack of acceptable collateral, high interest rates, low financial literacy and complex prevailing banking procedures. Michael et al (2018) recommended that farming associations needed to be formed to provide the needed capital and banking operations should be simplified to suit farmers’ circumstances.…”

“…Michael et al (2018) concluded the financial credit problem was due to a lack of acceptable collateral, high interest rates, low financial literacy and complex prevailing banking procedures. Michael et al (2018) recommended that farming associations needed to be formed to provide the needed capital and banking operations should be simplified to suit farmers’ circumstances. Yustus et al (2018) pointed out that rural Nigerian farmers in the Adamawa State have benefited from the rotary credit union, an association with pooled resources and government funding that allows farmers to borrow limited capital.…”

Informal finance: its drivers and contributions to farm investment among rural farmers in Northcentral Nigeria

“…Michael et al. (2018) investigated farmers’ access to formal agricultural finance in Adamawa state, Nigeria.…”

“…It could also result in low level of adoption of agricultural technologies by farmers (Bime and Mbanasor, 2011). This has implications for rural welfare, investment and savings (Michael et al. , 2018).…”