ABSTRACT

This study assessed the determinants of loan repayment among smallholder farmers in Ikwuano Local Government Area of Abia State. The specific objectives were to examine the socio-economic characteristics of the beneficiaries of micro-credit loans, examine the uses to which loans are put by the beneficiaries, derive the loan repayment status of the beneficiaries, estimate the determinants of loan repayment, estimate the determinants of loan repayment level, and examine the causes of loan default. Multistage sampling technique was used in selecting the sample used for this study. Data collected with the aid of well structured questionnaires and oral interview schedules were analysed using descriptive statistical tools such as frequency tables, means, percentages, and the OLS multiple regression analysis. Results indicate that the mean age of respondents was 43.68 years indicating that majority of the respondents were middle aged and could be said to still be active. Majority (80%) of the respondents were married. In terms of education, most of the respondents had one form of education or another. This showed that many of them have the propensity of adopting new farming techniques, and are conversant with the procedures for obtaining credit. The mean household size was 7.18, with a mean farming experience of 14.05. Farming was the primary occupation of 68.33% of the respondents. The mean interest rate was 11.65%, and mean repayment level was 70.6%. The significant variables affecting loan repayment were amount borrowed, household size, annual farm income and interest amount. The significant variables affecting loan repayment level were annual farm income, household size and amount of interest. High interest rate (20%) was identified as one of the causes of loan default. The study recommended among others, the reduction of interest rate, removal of barriers to women access to credit, and the planning of loan repayment to dovetail with the timing of income.