Ratio Performance Analysis and Factors Affecting Repayment Rate of Microfinance Institutions’ Credit Program to Maize Farmers in Niger State, Nigeria

Abstract

This study highlights the socio-economic characteristics of Microfinance Institutions' beneficiaries of micro-credit facility (Maize farmers in Niger State). The study also examined the ratio analysis as well as determinants of repayment rates of these institutions. To achieve the stated objectives of the study, data were obtained from 144 respondents selected through multi-stage sampling procedure. The purposive and random sampling techniques were employed at the various stages of selection. Descriptive statistics like percentages, means, frequency tables, etc, as well as production function model (Multiple Regression Analysis) were used to analyse the data that were collected using well structured questionnaires accompanied by interview schedule. The result of the analysis on socio-economic characteristics of the respondents revealed that most of the maize farmers who are microfinance institution clients were females (64.4%) and were of middle age. They have large family sizes averaging 8 people. Most of these beneficiaries (70%) had modern education. The result on ratio analysis indicates that the facility from the microfinance institutions is profitable to the clients as most of these ratios had outcomes based on a priori assumptions. The determinants of the repayments rate by the beneficiaries -Loan size, Dependency ratio, level of education, Enterprise type, Experience, Profitability index. Interest rate, shocks and portfolio diversity were all statistically significant at 1% level, while factors like Age, Training period, Repeat loans and Gender were not significant at both 1% and 5% level. From the institutions, factors that significantly affect loan repayment rate include, Outreach, age of institutions, methods of operations, interest rate, and credit officer's experience, however, shocks, Gender and Training period were not significant at both 1% and 5% levels. It was therefore recommended that more MFIs be established in the area as well as provision of more infrastructural facilities.