ABSTRACT:

The broad objective of this study was to appraise the small holder loan scheme (SHLS) of the Nigerian Agricultural and Cooperative Bank (NACB) in Abia State, Nigeria. The specific objectives were to &termine farmers' access to credit under the scheme, to determine the amount and adequacy of credit given to the small scale farmers under the scheme, to identify factors which influence loan repayment under the scheme and to identify factors militating against effective credit delivery under the scheme with a view to enhancing the success of the scheme. Data were collected from selected sample of farmers in Ikwuano Local Government Area and from Nigerian Agricultural Bank (NACB) using questionnaires for both. Data collection by the author lasted from December, 1997 to July, 1998. Descriptive statistic tools such as means percentages frequency distribution as well as the ordinary least squares (OLS) regression technique were used for data analysis. OLS regression technique was used to identify factors which influence loan repayment under the scheme. The results indicate that loan repayment was poor. Only about 21.81 percent of the principal sum was recovered between 1992-1996 while only 32.42 percent of the interest was recovered at the same period. Only the amount of credit received was found to have positive relationship with the amount of loan repaid (principal + Interest). The major problems of the scheme include inadequate supply of loanable funds to the scheme, poor loan recovery, loan diversion, poor loan supervision, falsification of information by beneficiaries, non existence of claimed projects and remoteness of project locations. It is suggested that NACB SHL policy with respect to designing criteria for selecting loan beneficiaries should emphasize on intensive loan rationing which enhance loan repayment and de-emphasize on extensive extensive loan rationing which discourage loan repayment More indepth study of optimal loan requirements for beneficiaries requesting for loan be undertaken.