Determinants of Farmers’ Access to Micro-Credit in Oyo State, Nigeria

Abstract

This study investigated access of farmers to credit in Oyo State, Southwest, Nigeria . Eight(8) communities, (2 from 4 Local Government Areas in each agricultural zone) were selected. 240 respondents (30/community) were sampled using 3-stage stratified random sampling technique. Both primary (using interview guides) and secondary data were collected. Apart from descriptive statistics and the Z-score test of significance, Tobit regression model was used to capture the expected dichotomous responses of respondents, and the determinants of their access to the credit in the study area. The study revealed that, most of the respondents (82.4%) were found between the active productive ages of 25 and 55 years in the study area, with the mean age found to be 43.2 years. About 76.2% are married. Mean household size is 8 persons. Farming as the major occupation was dominated by 48.8% of crop farmers. Though 53.3% had no formal education, 45.9% had attended Primary school education Years of farming experience in the area ranged from 5-42 years with the modal class between 21 and 30 years. Result of the Tobit probability regression analysis also revealed that age(X₁),education(X₄),land ownership(X₉),Income(X₁₁) and value of Assets(X₁₂) were all found to be significant p ≥ 0.01 while marital status(X₃), farming experience(X₅), existence of Credit Institutions in the area(X₇) were significant at p ≥ 0.05), to access to credit in the study area. All the significant variables except Age (X₁) were positively correlated to access to credit. Adjusted R² was 0.876. It was concluded that policies be redirected on government-sponsored and guaranteed micro-credit financing schemes that could favour the small holder farmers who are the major producers of food and fibre in Nigeria particularly in the study area. The need for rural credit scheme to be expanded in terms of scope and geographical coverage, promote the awareness of rural banking culture, organize farmers into formidable cooperatives to facilitate access to credit, strengthen credit policies and redefine Small and Medium Scale Enterprises and Investment Scheme(SMEIS) to become better focused were therefore recommended.
Keywords: Access, Micro-credit, credit sources, Farmers, Oyo State, southwest Nigeria