ACCESS TO AND INVESTMENT OF FORMAL MICRO CREDIT BY SMALL HOLDER FARMERS IN ABIA STATE, NIGERIA. A CASE STUDY OF ABSU MICRO FINANCE BANK, UTURU

Abstract

Inadequate capital is a major problem confronting small-scale enterprises including farmers in Nigeria, despite the fact that small scale farmers produce the bulk of the food consumed locally and some export crops which generate foreign exchange to the country. Micro credit is a powerful anti poverty tool that has demonstrated relevance to people on six (6) continents and in nearly every country. Consequent upon the foregoing, this study determined access and investment of formal micro credit by small holder farmers in Abia state, Nigeria. A case study of Abia State University Micro Finance Bank Micro Finance Bank, Uturu (ASUMFB). Specifically, it sought to describe the socio-economic characteristics of loan beneficiary; to examine demand for micro credit by comparing the amount of formal loans applied for with the amount approved and the amount actually received by the farmers; to determine the uses of micro credit by small farmer loan beneficiaries; to determine factors that influence access to micro credit in micro finance banks. Purposive sampling technique was used to select 96 loan beneficiaries. Instrument of data collection was through a set of structured and pre-tested questionnaire. The study employed descriptive statistics and Probit regression model as analytical tools. The results of the Probit analyses showed that the coefficient of age, education, farm income, extension contact and distance between home and loan source were statistically significant at one percent probability level while farming experience and farm size were at 5 percent level. It was however recommended that Micro finance banks should ensure timely disbursement of loans to young, experienced and educated farmers who are more likely to utilize resources efficiently.