Abstract

The study evaluated the micro-credit programme of the National Special Programme on Food Security (NSPFS) in Abia State. The study had the objective of ascertaining the factors that affect loan repayment, recovery rate and repayment performance. A two- stage sampling procedure was adopted in the study. The first stage involved purposively selecting three sites in the three agricultural zones viz; Ihim in Umuahia, Umuobasiukwu in Ohafia and Ndida oza in Aba zones. The second stage involved the random selection of 50 beneficiaries from each pilot site giving a sample size of 150 beneficiaries. A well structured questionnaire was used in data collection. Data analysis involved the use of descriptive statistics, mortality based-approach and ordinary least square estimation techniques. The result revealed that most of the scheme beneficiaries were women as 90% and 64% of the beneficiaries were women in Ohafia and Umuahia zones against 10% and 36% male beneficiaries. In Aba, the majority of the beneficiaries were men (5 8%) against 42% for women. The study recorded poor supervision rate as about 80%, 74% and 60% of the beneficiaries in Ohafia, Umuahia and Aba zones respectively were only visited twice for supervision. The double log functional form came out as the lead equation in the determinants of loan repayment. The coefficient of multiple determination showed that about 35.2% of the variables — amount borrowed, transaction cost, age, education household size, income and farming experience accounted for the variability in loan repayment. However, amount borrowed, household size and farm size were both positive at 1% significant level. The results further showed that loan repayment decreased with farming experience while female beneficiaries were more likely to default in payment. The mortality based-approach revealed that recovery was low in the three sites. In Umuobasiukwu, the percentage unpaid loan balance PULB) of 63%, 93%, 76% and 96% were recorded for the periods of 2003-2006 respectively. him had PULB of 64%, 99%, 15% and 95% for the periods of 2003-2006 respectively while in Ndida oza, it was 64%, 98%, 42%, and 95% for the same period. The multinomial logit model result showed that two variables were positively associated (Household size and income) with a beneficiary belonging to the delinquent categoiy while eight variables (age, education, supervision rate, disbursement lag, loan use, farm size, farming experience and sex) were negatively associated with a beneficiary belonging to the delinquent category. Income, farming experience, farm size and. loan supervision was statistically significant at 5%, 10%, 1% and 5% level respectively. Again, three variables were positively associated with belonging to the default categoryand seven negatively associated with only income that was statistically significant at 10%.The study recommends that, to improve on the recovery rate, time should be devoted to loan monitoring and supervision. Improvement should be made in the time of disbursement of loan to farmers.