ABSTRACT

The study compared cash savings and indebtedness among rural farm and non farm households in Akwa Ibom State. It was designed to ascertain the factors that determine cash savings and indebtedness among rural farm and non farm households respectively and also examine the relationship between savings and indebtedness among the farm and non farm families. A multi stage sampling procedure aided by pre-sampling survey was adopted in selecting respondents for the study. A total of252 respondents (comprising 108 from rural farms and 144 non farm families) were randomly selected for the study. Data used in this study were generated using a well structured questionnaire. In analyzing the data, descriptive statistics, Ordinary Least Square regression analysis, probit regression model and simple correlation were employed. The result obtained on the socio economic characteristics of respondents revealed that farmers were more elderly; less educated and have larger household size than their non farm counterpart. Income and cash savings of non farmers were relatively higher, and their debts were less than those of farmers. The factors that were statistically significant in influencing rural household saving behaviour (with respect to allocative choice) were household size, age, level of education, income, professional experience and distance. The significant variable that influence borrowing behaviour of rural household includes; household size, age, level of education, loan size, professional experience, size of business, distance, interest, loan duration, source of borrowing and income. Among the farm households, factors that significantly influence cash savings were income, age, households’ size, educational level, business size and interest rate. With respect to non farm households, four statistically significant variables including income, distance, business size, and interest rate determined cash savings. The coefficients of multi determination (R2) were 0.931 and 0.341 for rural farmers and non farmers respectively. Results on indebtedness indicated that five variables were significant in influencing indebtedness offarm families and non farm families respectively. These are loan duration, income, age, educational level, household size and loan size. The coefficients of multiple determinations (R2) were 0.876 and 0.841 for farm and non farm respondents respectively. Chow’s test revealed that there is significant difference between cash saving and indebtedness of rural farmers and non farmers respectively, and the correlation result show that farmers’ saving to debt ratio is 1: 0.95 while non farmers ratio is 1: 0.307. The study recommends that to increase income, boost saving and reduce indebtedness, indigenous financial agencies and cooperative union in rural areas should be massively encouraged with soft loans through the government poverty alleviation program to increase their loan able funds for on-lending to rural entrepreneur.