ABSTRACT

The study analyzed effect of formal financing and investment on the performance on bakery enterprises in Abia State, Nigeria. Multi-stage random sampling techniques were employed in the selection of 120 respondents. Primary data were collected with the use of questionnaires using enumerators. Relevant descriptive and inferential statistics such as frequencies, percentages, means, multiple regression models were used for data analysis. The result shows that 53.3 percent of the bakery enterprise operators in Abia state were females while 46.7 percent were males and their average age was 39 years. Majority (92.5%) of the respondents in the study area had one form of formal education or the other and about 65.8% were married. The mean household size was 6 persons and the mean baking experience in their line of business was of 19 years. Majority of the respondents (66.7%) belonged to one association or the other. The average amount of credit accessed by the respondents was N139,583.00. The major condition for accessing loan was secured and realizable collateral. The gross profit and net profit for an average enterprise per month were N86,852.91 and N82,533.93 respectively. The result showed that the average investment and amount of loan received were N 178,579.93 and N139,583.00 respectively, while the owners ‘equity was N38,996.93. Also the debt to equity ratio of the bakers is 3.58. A positive (direct) and significant relationship between loan amount with corporative membership, interest payment, equity capital and loan duration while a negative and significant relationship exists between leverage ratio, cost of supervision and marketing expenses. Amount of loan (1%), revenue from sales (10%), number of bakery product (10%) all move in the same direction (positive) with level of investment while volume of investment was negatively related to depreciation of farm equipment. Furthermore performance was positively related to amount of loan, location of business, number of bakery product, while transportation and levies were negative and significant variable that influence the performance of bakery enterprise. Furthermore, a positive (direct) and significant relationship exist between amount invested, size of business and frequency of processing while a negative and significant relationship exist between price of product and performance. The major problems associated with loan access were delayed approval (0.817), long protocols (0.713) and poor government policy (0.68). The study recommends that conscious efforts should be geared towards increased encouragement of the bakery enterprise in order to meet the demands of bakery businesses for food security in both the study area and the country (Nigeria) in general.