ABSTRACT

This study analysed the effect of liquidity constraint on performance among selected smallholder agribusiness entrepreneurs in Abia State, Nigeria. It specifically examined the socio-economic characteristics of the selected smallholder agribusiness entrepreneurs in Abia Stae, examined the cost of funds available to them, analysed performance among the entrepreneurs, examined the effect of liquidity constraint and other factors on their performance, the factors militating against access to liquidity among the respondents, and the extent liquidity constraint affected their performance in Abia State. Primary data were used. The study made use of a multistage sampling technique in selecting respondents in which the 3 agricultural zones of the State were selected, 1 local government area was randomly selected from each of the agricultural zones of the State, and 25 agribusiness entrepreneurs were randomly selected from each of the LGAs to give a sample size of 75 respondents. Regrettably, out of the 75 questionnaire administered and retrieved from the respondents, 73 were found useful and used for the analysis. Various descriptive and inferential analytical tools such as financial ratios, regression analysis were used in data analysis. Results showed that most of the smallholder agribusiness entrepreneurs in Abia State, Nigeria were single (53.42%), males (52.05%) with a  mean age of 42 years, who ventured mostly into poultry business (24.66%), fish farming (20.55%), crops production (12.33%) and produce sell (12.33%). They funded their business through debt financing (100.0%), equity (98.63%) and lease (89.04%). They enhanced their enterprise through distribution channels (49.32%) and supply chain (27.40%), and increased their performance through market shares (43.84%) and sales volume (31.51). On the cost of funds that affected their enterprises, debt financing had the highest total cost of (N1,176,000), followed by equity financing (N1,062,600). Smallholder agribusiness entrepreneurship in the area was profitable given a return on investment of 1.22 per annum. The Ordinary Least Square regression result on effect of liquidity constraint and other factors on the performance of the entrepreneurs in the study area revealed that the exponential functional form gave the best fit result based on the magnitude of the coefficient of multiple determination (0.869), the number of significant variables, the agreement of the signs borne by the coefficients of the variables as well as the significance of F-ratio (7.59^***). Liquidity constraint (1.0%), sex (1.0%), cost of operations (1.0%) and cost of funds (1.0%) negatively affected the performance of the respondents, while education (1.0%) and experience (1.0%) positively affected it. Insufficient land ( =4.32), insufficient credit facilities ( =4.23), among others, were the factors militating against access to liquidity by the respondents, while costs of transaction ( =4.12) and size of market ( =3.59) were among the factors that revealed the extent to which liquidity constraints affected the performance of the entrepreneurs. It was recommended that government and non-governmental organizations should intimate and provide smallholder agribusiness entrepreneurs with information and trainings on liquidity management, and support the entrepreneurship financially.