Factors Affecting Access to Agricultural Loans in Anambra State: An Econometric Analysis

Abstract

This study was designed to examine the extent to which farmers have benefited from loans/credit activities of commercial banks, as well as the factors affecting accessibility of credit/loans by banks to them. Multistage and simple random sampling techniques were adopted in selection process of sample farmers and bank officials. Two sets of questionnaires were designed and administered to 75 small-scale farmers and six officials of the two banks in the Onitsha Agricultural Zone of the state, to gather information and relevant data for study. Eighty-six percent of the questionnaire forms were returned and used in the analysis. Descriptive tools and econometrics method were used to analyse the data collected and to examine the effect of certain socio-economic and other variables on loan/credit approval. Findings show that farmers in the area have not benefited substantially from the agricultural loan facilities of commercial banks. Access to bank loans in the area was found to depend largely on ability of the applicant to provide collateral security. Age, crop type, and income were found to be important and significant determinants of access to agricultural loan in the Zone. The study therefore recommended among others, that the government should, through Central Bank of Nigeria, direct banks to increase the small-holder loan limit to farmers, as well as de-emphasizing their insistence on collateral security.