Micro-Finance Banks’ Intermediation and Cocoa Farming Inputs Financing in Ondo State, Nigeria

Abstract

Over-reliance on oil export as the main source of revenue in Nigeria has necessitated renewed interest in non-oil earners like cocoa which needed adequate inputs financing to achieve increased output. Majority of the literatures in the study did not focus on the effects of micro-finance banks’ intermediation on cocoa farming inputs financing. This study investigated the effects of micro-finance banks’ intermediation on cocoa farming inputs financing in Ondo state Nigeria. Primary data were collected from the three senatorial districts of the state. Since the population of the study was unknown the Cochran (1977) method for estimating sample size was adopted to derive a sample size of 423. Questionnaire was used to elicit responses from 423 cocoa farmers who were sampled randomly from each district. Cocoa farming inputs financing was regressed on micro-finance banks’ credit products, lending methods and loan conditions to answer research questions one, two and three while cocoa farming outputs was regressed on micro-finance banks’ credit and inputs financing to answer research question four. Data were analysed using frequency count, mean, standard deviation and logistics regression. The results from the analysis revealed that micro-finance banks’ credit products had positive and significant effect on cocoa farming inputs financing while micro-finance banks’ lending methods had positive but insignificant effect on cocoa farming inputs. Also, micro-finance banks’ loan conditions were established to have negative and insignificant effect on cocoa farming inputs financing . Jointly the model’s exogenous variables were significant. Furthermore, micro-finance banks’ credit had positive and significant effect on cocoa outputs while cocoa farming inputs financing was insignificant and jointly the independent variables were significant. It was concluded that micro-finance banks’ intermediation activities significantly influence cocoa farming inputs financing and outputs. It was recommended that micro-finance banks should create loan awareness, make loan conditions less stringent, improve loan monitoring and promptly respond to cocoa farmers’ loan request.