The effect of social capital on access to micro credit among rural farming households in Abia State, Nigeria

Abstract

The study examined the influence of social capital on access to micro credit among rural farming households in Abia State, Nigeria. A four stage random sampling technique was employed in collecting data from two hundred and four (204) rural farm households in local institutions using structured  questionnaire. The data were analyzed using descriptive statistics, likert scale analysis and binary probit regression model. The research revealed that the rural farming households had access to micro credit  from religious, village, farmers, age-grade, gender-based, traders associations, cooperative societies and self help groups. The study also showed that the rural faring households did not have access to micro  credit from NGOs, dance group, fadama group and Parents'/Teachers' association since the critical  midpoint access score was greater than their calculated mean values. The result of the mean amount of  credit demanded by rural farm households vis-a vis disbursement by their local institutions showed that religious association granted the highest amount of credit (N91,950.0) to their members more than any other local institutions in the study area, while the mean amount demanded was N128,491.3. The result of Probit regression estimate of the effect of social capital and demographic factors on access to micro credit showed that the critical and significant social capital variables that influenced access to micro credit were; membership density, cash and labour contributions of households to associations, while age, occupation and history of household access to micro credit were the demographic factors that influenced rural household access to micro credit. Since social capital significantly influenced access to micro credit, policy makers interested in improving the living conditions of rural households are advised to  consider promoting social capital as one relevant ingredient to achieve the Millennium development goals of reducing poverty by half.

Keywords: social capital, access, credit, effect, farming households