ABSTRACT

This study was designed to analyse the rural farmers credit worthiness and procurement potential under quoted banks in Abia State, Nigeria. The specific objectives included to determine factors that influence credit procurement; factors that influence credit repayment, as well as determination of credit worthiness among beneficiaries of quoted banks credit. Data were collected through the use of well- structured questionnaire administered to 120 farmer beneficiaries of quoted banks' rural credit. Besides, of the 120 respondents, 58 were into arable crop production while the remaining 62 were into livestock production. Data analysis was done with the use of percentage, frequency table, financial ratio, multiple regression and discriminant function analysis. The result of the multiple regression indicated that factors which determined credit procurement by livestock farmers were agricultural loan portfolio of the lending bank which was positive at 5% significant level; farming experience has a positive coefficient and maintained 1% significant level . Also household size and distance between home and source of loan maintained positive sign but significant at 5% and 1% respectively while interest paid on loan has a negative coefficient but significant at 5%. Moreover, credit procurement by arable crop farmers were positively influenced by farm income and off farm income at 1% respectively and negatively influenced by level of education and farming experience and significant at 5% and 1% respectively. Credit repayment is positively influenced by interest paid on loan, previous income and value of collateral. However, result of the discriminant function analysis shows that variables like age, gender, educational level, farming experience, distance between home and source of loan; amount of loan, total expenditure, farm income, value of assets, farm size, total expenditure/income ratio, outstanding loan/total asset ratio and off farm income made some contributions to the beneficiaries credit worthiness. The result shows that about 94% of livestock beneficiaries were credit worthy while about 6% were identified as non credit worthy. In the case of arable crop farmer borrowers 40 of them which formed 97.6% were credit worthy while 1 farmer borrower, which is 2.4%, could not be classified. Meanwhile, 16 of the non-credit worthy farmers formed 94.1% whereas 5.9% which is 1 farmer could not be classified. The result of financial/performance ratio has it that current ratio for livestock and arable crop enterprises were 2.21 and 3.00 respectively while interest coverage ratio were 27.34 for livestock enterprise and 34,44 for arable crop enterprise. In the case of Net profit margin livestock and arable enterprises were 39% & 31% respectively while Return on investment to both livestock and arable crop enterprises were 57% and 42% respectively. Problems perceived by farmers in credit assessments included non availability of collateral, distance between home and bank, high interest rate, untimely loan approval, natural disaster, poor gestation period of loan while banks perceived problem were low availability of fund, diversion of loan, inconsistent government policy. Based on this result, adequate policies and programmes that will help in credit use and administration were designed.