Analysis of credit utilization behaviour of small scale business farmers in Bosso Local Government Area of Niger State, Nigeria

Abstract

This study analyses the credit utilization behavior of small scale business farmers in Bosso LGA of Niger State, Nigeria. The main objective of the study include the identification of the various formal and informal sources of credit, pattern of their utilization by farmers as well as the examination of the effect of credit allocation on the value of output. Primary data used for the study were obtained using structured questionnaire administered to 60 purposively selected farmers. Descriptive statistics and regression analysis were used to analyze the data. Result shows that most of the farmers (95.0%) were married and ownership of farmland mainly through inheritance. Result of the regression analysis gave R2 value of 0.684. This indicates that 68.4% of the variation in Y (value of output) was explained by the independent variables (X1 – X5) included in the model. These include X3 (amount allocated to other inputs), X4 (amount allocated to equipment) and X5 (amount allocated to land). High interest rate, inadequate credit and late arrival of credit were identified by the farmers as some of the constraints encountered in accessing credit. It was therefore recommended that timeliness of loan disbursement will reduce its diversion to other non-farm uses. Interest rate charged by banks should be reduced to enable farmer’s access it profitably