Analysis of factors affecting agribusiness cooperators’ access to credit from formal sources in Abia State, Nigeria

Abstract

The study focused on determinants of Agribusiness Cooperators’ access to credit in from formal sources in Abia State, Nigeria. Specifically, the study examined the socioeconomic characteristics of respondents; estimated the determinants of access to credit and ascertained the challenges associated with Agribusiness Cooperators’ borrowing from formal sources. Multistage sampling technique was adopted in sampling for location and respondents. A total of 150 respondents were sampled from list of Agribusiness Cooperators in the various communities. Data were collected using questionnaire administered on respondents using interview schedules and observation. Data were analysed using descriptive and inferential statistics such as percentages, means and the Ordinary Least Squares multiple regression model. Results indicate that Agribusiness Cooperators in the study area are predominantly young, productive and literate with average farming experience of 7 years. Findings further showed that the cooperators are predominantly males, smallholders with mean household size of 6 persons and mean income of N45,878.00 per farming season. Results of the regression model indicated that farm size, education and loan period showed expected positive signs a priori and were significant at various probability levels. Contrary to a priori expectation, experience showed a negative sign and was significant at 10% level. High interest rate, delay in loan disbursement and reluctance in repaying loans were rated the most dominant challenges to borrowing from formal sources. Based on the findings, it was recommended that cooperatives should be encouraged to organize periodic capacity building exercises for members to keep them abreast of developments vis-à-vis agribusiness investment and credit access.

Keywords: loan, interest rate, loan disbursement and cooperatives