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Title
Agricultural credit in Nigeria: a case study in the Cross River state |
Full text
http://hdl.handle.net/1885/122903 |
Date
1985 |
Author(s)
Etuk, Boniface Dan |
Abstract
The study is an attempt to analyse the impact of agricultural
credit programmes on the development of the subsector of food
production. A review of the performance of the agricultural sector and
the economy as a whole had given some indication as to what importance
should be accorded to food production in the process of agricultural
development. Among the problems were the existence of food shortages,
sharply increasing food import bills, and above all, the unlikelihood
of sustaining an increasing population (the growth rate averaged at
2.9% per annum) without increased food production.
The study aimed to analyse the lending policies and operating
procedures of credit institutions, in order: to highlight the inherent
problems in the systems; to examine the demand for credit as well as
factors and problems associated with the supply of credit; and to
develop suggestions for a new rural credit administration with a
greater potential for success.
The rural money market was found to be essentially dualistic,
comprising the formal and informal sectors. The analysis of lending
policies revealed that all formal institutions were rigid in their
requirements for collateral, and these were viewed as serious handicaps
by local farmers. Institutions, such as the Nigerian Agricultural and
Cooperative Bank and the Agricultural Loans Boards, were found to place
limits on credit and size of farmland respectively. There was bias in
the subsector distribution of credit, this was found to favour
livestock enterprises, mainly poultry. The Nigeria Agricultural and
Cooperative Bank was found to be extending its activities outside its
primary functions, and this was seen as detrimental to the success of
the credit programme.
Lending rates were found to be uniform, but quite low, for all
institutions, since these were fixed by the Central Bank. Lending to
individuals attracted 7% interest, whilst for those institutions that borrowed to relend, it was fixed at 6%. Consequently, the commercial
banks were reluctant in extending loans to farmers.
In the informal sector, Osusu clubs, Friends and Relatives,
Traders and Middlemen, and Moneylenders featured prominently in the
extension of rural credit, but the magnitude of their contributions
could not be established because of lack of data on their activities.
The characteristics of respondents were examined, particularly as
it was obvious that 107 (53%) of the total number of respondents did
not borrow money during the period considered. The major problem with
non-borrowers was their size of farm holdings, which were found to be
small compared with those of borrowers. In addition, these farms were
made up of several scattered parcels, some of which did not constitute
an economic unit. In both farm and non-farm characteristics, there were
significant differences between institutional borrowers. The
distribution of loans was found to disadvantage the small farm
holdings, with a higher proportion of loans being channelled to medium
and large farm size holdings. The same pattern was applicable for
overdue loans outstanding.
In contrast to the conception that most rural demand for
agricultural credit is for family consumption, the study indicated that
this was a generalised misconception, which failed to portray the
normal trends in borrowing and use of credit. In terms of volume,
commercial banks were found to play an important role in rural credit,
but their activities benefitted only very few farmers. The role of
cooperative societies in terms of volume and spread of credit was
insignificant, and the informal sector accounted for 2 Q % of total
borrowers. Education, farmland and stated credit needs of the
individuals were found to influence the supply of credit significantly.
Farmers were generally aware of the on-going credit programmes, mainly
through their fellow farmers and agricultural extension agents.
Nevertheless, the problems of smallholder improvement were not
found to be rooted in lack of credit, there are structural and
infrastructural problems which must be tackled before significant
progress can be achieved in credit delivery. These were problems of
land fragmentation posed by the existing land tenure system (which the
current land law has not succeeded in removing), inadequate irrigation facilities, insufficient marketing outlets, and inadequate price
support for farm produce. The conclusion of the study is that, in the
absence of government intervention in these areas, credit delivery will
make only a modest impact on smallholder development. |
Subject(s)
Agricultural credit Nigeria; Agricultural cooperative credit associations Nigeria |
Language
en |
Type of publication
Thesis (Masters) |
Format
xi, 96 leaves |
Identifier
b1555820 |
Repository
Canberra - Australian National University
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Added to C-A: 2018-11-22;13:04:11 |
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