Credit uses and causes of repayment default among farmers in Chanchaga and Bosso Local Government Areas, Niger State, Nigeria

Abstract

The study examined the credit uses and repayment default among fanners, using loan beneficiaries of Nigeria Agricultural Cooperative and Rural/ Development Bank (Minna Branch) as the respondents. Structured questionnaire were used to collect data from randomly selected 130 farmers. Data were analysed using descriptive statistics and chi-square test. Findings of the study showed that all the respondents (100%) used the credit for farm activities while 39.23% of the respondents also utilized part of the credit for non-farm activities for payment of debt, school fee, hospital and food bills. The result further reveals that 10% of the respondents did not receive any complementary services apart from the loan package. Some-of the major root causes for repayment default identified includes unconducive collection term, lack of market for produce and high cost of inputs. Other causes were due to pest and diseases, misallocation of credit funds and poor health problems. A significant relationship exists between respondent's household sizes (x2 = 0.034, P<0.05) and repayment default. To alleviate the problem of unconducive collection term, it was suggested that the lending institutions should assist the fanners by accepting repayments in kind in special cases where farmers do not have market for their produce. Furthermore, lending agencies in collaboration with ADPs should provide adequate complementary services to loan beneficiaries to reduce diversion and misallocation of credit funds.