Financial Intermediation In Agriculture In Nigeria: Emerging Role Of Non- Governmental Organizations (Ngos)

Abstract

The study compared the credit operations of Farmers Development Union (FADU) - an NGO, with the Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB) - a public sector finance agency in agricultural financing with a view to determining the emerging roles of NGOs in Nigeria's agricultural landscape. To achieve this, the socio-economic characteristics of farmers who use credit, and the performance of the selected credit institutions on the basis of credit delivery and loan repayment were identified and analysed using descriptive, t-test statistic and regression analyses. The results of the study revealed that the
operational flexibility of the NGO was its major appeal to farmers. The use of groups as social assets for collateral instead of physical assets increased the vibrancy of the NGO compared to the public finance agency and provided a level playing field for both male and female farmers in
the credit market. Patrons of the NGO made a mean savings of N22,284 whereas those of the public finance agency saved only N13,472. While the NGO disbursed more credit to its clients compared to the public finance agency, it also recovered 68.5% of its loans compared with 49.3% recovery made by the public finance agency. If formal banks will be able to impact on small farmers as the NGO, they will need to provide non-collaterized loans and to groups rather than individuals.

Keywords: agricultural financing, farm capitalization, credit disbursement and loan recovery.