Abstract
The study examined loan repayments and defaults by large and small scale farmer-beneficiaries of Bank of Agriculture (BOA) loans from 2010-2016 in Anambra State, Nigeria. The specific objectives were to examine the total amounts of loan repayments and defaults by large and small scale farmer- beneficiaries of BOA loans and constraints militating against loan repayment/default by the farmers. A multistage sampling procedure involving purposive and random sampling methods were used to select 256 respondents for the study. Data were collected from both primary and secondary sources. Primary data were collected using two sets of questionnaire; one for the farmers and the other for the bank officials while secondary data were sourced from loan transaction records in the headquarters and branch offices of BOA in the State. Collected data were analysed by means of descriptive statistics technique. Findings on repayments indicated that more repayment, N69, 533,625 constituting 60.33% of total repayment, was made by the large scale farmers on livestock and fisheries enterprises than the N33, 384,988 or 46.71% of the repayment made by the small scale farmers on the loans they obtained for similar enterprises. The small scale farmers’ major (53.29%) repayment was on cropping enterprises while the large scale farmers preferred to spend a smaller percentage (39.67%) of their repayments on cropping enterprises. Comparatively, rate of default was higher (60.33%) for livestock and fisheries enterprises of the large scale farmers than the 46.76% of the small scale farmers. However, rate of default by the small scale farmers, 53.24%, was higher for the cropping enterprises that the 39.67% rate of default recorded by the large scale crop farmers. Poor returns from sale of product and low market price for product were the major constraints. Government through the central Bank should consider reducing cost of lending for agricultural enterprises by lowering the interest rate further and BOA should ensure that disbursements meet up with appraisal amounts in the business plans of the farmers to avoid uncompleted and failed projects were recommended. Keywords: Economic, Loan, Repayment and Default DOI : 10.7176/JNSR/9-16-06 Publication date : August 31 st 2019
Highlights
The agricultural sector is an engine room for sustaining growth of Nigeria economy and still remains the mainstay of the economy of most African States (Olosunkanmi, Afolabi and Daramola, 2012 and Nkamigbo, 2018)
Agriculture is contributing about 42% of the gross domestic product (GDP) of Nigeria (Central Bank of Nigeria (CBN), 2011)
Agriculture is the predominant occupation in the rural areas engaging more than 70% of the rural population. Both the large and small scale farmers in the area have benefitted from credit facilities of the Bank of Agriculture (BOA) for the various crops, livestock and fisheries production activities
Summary
The agricultural sector is an engine room for sustaining growth of Nigeria economy and still remains the mainstay of the economy of most African States (Olosunkanmi, Afolabi and Daramola, 2012 and Nkamigbo, 2018). One of the problems confronting farmers and agricultural productivity and growth in Nigeria is inadequate capital despite the glaring contributions of agricultural sector in the overall economic development of the country (Odoemenam and Obinne, 2010). Agricultural credit is closely related to providing needed resources, which most farmers cannot source from their personal savings. In this regard, the provision of credit has to be made a vital way of promoting agricultural development in Nigeria. Loan default is the failure to pay interest or principal on a loan or security when due It occurs when a lender is unable to meet the legal obligation of debt repayment
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