ABSTRACT
The study determined access to credit and repayment potentials among male and female poultry farmers in Abia State, Nigeria. A total of 120 (each of 60 male and 60 female) poultry farmers were selected for the study through a multi-stage sampling technique while a structured questionnaire was administered to the respondents to elicit the necessary data. The objectives of the study were to describe the socio-economic characteristics of male and female poultry farmers, examine the level of access to credit among male and female poultry farmers, describe the structure and pattern of credit use among male and female poultry farmers, estimate the factors influencing credit access among male and female poultry farmers, determine the factors influencing credit repayment potentials among male and female poultry farmers, determine the differences in credit repayment among male and female poultry farmers, identify the problems encountered in accessing credit among male and female poultry farmers. Data collected were analyzed using descriptive statistics (tables, means, frequencies and percentages) as well as econometric tools (Logit, probit and z-test models). The results of the study indicated that females had higher credit demand than males while they (females) received less and repaid higher than their male counterparts. The probit regression model results showed that age, interest rate, livestock size, cooperatives participation, years of education, extension contact, household size and off-farm income were predictors of credit access. Similarly, farmers’ education, credit release, off-farm income, amount of credit received, interest rate, supervisory visits, repayment period and livestock size are also predictors of credit repayment potentials. Test of differences showed that mean credit demanded, received and repaid by the male and female poultry farmers were statistically significant at 1%. High interest rate was the major problem faced by both male and female poultry farmers in accessing credits. Delay in approval was ranked second by the male poultry farmers while high collateral was second for the females. Discriminating interest rate that will be borrower’s friendly should be introduced by agricultural credit providers to encourage poultry farmers to obtain more credits. Credit institution should endeavuor to release or disburse credit to farmers on time, this will enable farmers to repay their credit as at when due. Guarantors should try to be confident to help female farmers acquire credit since they have high repayment ability, therefore are deemed creditworthy. Government agencies and financial institutions should consider credits that are gender sensitive (male and female) which will bring equality in credit access among male and female poultry farmers.
TABLE OF CONTENTS
Title
page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table
of Contents
vi
List
of Tables vii
List
of figure
viii
Abbreviations
and Acronyms
ix
Abstract x
CHAPTER 1: INTRODUCTION
1.1.
Background of the Study 1
1.2.
Problem Statements
5
1.3.
Research Questions 8
1.4.
Objectives of the
Study
9
1.5.
Hypothesis of the Study 10
1.6.
Justification of the
Study 10
1.7.
Scope of the Study 12
1.8.
Limitations of the
study
12
CHAPTER 2: REVIEW OF
RELATED LITERATURE
2.1.
Conceptual Review
13
2.1.1. Concept
of credit
13
2.1.2. Concept
of credit accessibility 13
2.1.3. Concept
of creditworthiness
14
2.1.4. concept
of credit terms 15
2.1.5 Concept
of repayment capacity 15
2.1.6 Concept
of repayment period, grace period and interest rate 16
2.1.7 Concept
of gender (male and female) 17
2.1.8 Concept
of gender (male and female) access to credit 17
2.1.9 Concept
of Credit and its sources 18
2.1.10 Concept
of poultry production/sector in Abia State, Nigeria 19
2.1.11 Concept
of economic potential of poultry sector in Nigeria 21
2.1.12 Concept
of problems and prospects of poultry production in Nigeria 22
2.2
Theoretical Review
25
2.2.1. Credit
theory of money
25
2.2.2. Theory
of credit priorities
26
2.2.3. Hold-up
and soft-budget constraint theories 27
2.2.4. Theory
of credit scoring and competitive pricing of default risk 28
2.2.5. Theoretical
model of equilibrium 29
2.3.
Empirical Review
32
2.4.
Analytical Review
35
2.4.1 Descriptive
statistics
35
2.4.2 Probit
regression
36
2.4.3 Binary
logistic regression
38
CHAPTER 3: METHODOLOGY
3.1 Study Area
40
3.2 Sampling Techniques
42
3.3 Data collection Procedures
44
3.4 Method of Data Analysis
44
3.5 Model Specification 44
CHAPTER 4: RESULTS AND
DISCUSSION
4.1.
Socioeconomic
Characteristics of the Respondents
49
4.2.
Level of access to Credit
among Male and Female Poultry Farmers 52
4.3.
Mode of Credit use among Male and Female
Poultry
Farmers
54
4.4 Factors Influencing Access to Credit
Among Male and Female
Poultry
Farmers 56
4.5.
Factors Influencing Credit Repayment
Potentials among
Male and Female Poultry Farmers 64
4.6.
Test of Differences in Credit Demand,
Receipt and Repayment
of male
and Female Poultry Farmers 73
4.7.
Problems Encountered in the Repayment of
Credit among Male
and Female Poultry
Farmers in Abia State 75
CHAPTER
5: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1.
Summary
77
5.2.
Conclusion 78
5.3.
Recommendations
79
References 82
LIST OF TABLES
3.1:
List of the Study Area 43
4.1:
Socioeconomic characteristics of the
respondents 50
4.2:
Level of access to credit among male
and female poultry farmers 53
4.3:
Mode of credit use among male and
female poultry farmers 54
4.4: Factors
influencing access to credit among male and female
poultry
farmers 57
4.5: Factors
influencing credit repayment among male and female
poultry
farmers 65
4.6:
Paired samples statistics 73
4.7:
Paired sample z-test of significant
differences 74
4.8: Problems
encountered in accessing credit by male and female
poultry
farmers 76
LISTS OF FIGURE
Page
4.1:
Percentage distribution of credit receipt and payment 55
ABBREVIATIONS AND
ACRONYMS
UNDP: United Nations Development Programme
CBN:
Central Bank of Nigeria
MFIs: Microfinance institutions
FAO: Food and Agriculture Organization
NACRDB: Nigeria Agricultural Co-operative and
Rural Development Bank’
ADP:
Agricultural Development
Programme
CGS:
Credit Guarantee System
FFIEC:
Federal Financial Institutions
Examination Council.
FDIC:
Federal Deposit Insurance
Corporation
NBS:
National Bureau of
Statistics
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Agriculture
in Nigeria can be seen to be characterized by the peasant farmers, who produce vb95%
of the total production in agriculture. Nigeria agriculture is featured by low
farm income, low level of ability to satisfy the food and fiber needs of the
country (Otunaiya, 2012). Consequently, Nigeria still shows the exact symptoms
of peasant agriculture and that the result of this is low productivity in
virtually all the sub-sectors of agriculture (Otunaiya, 2014).
The
poultry industry plays important roles in the development of Nigeria economy.
Poultry is about 58.72 percent of the total livestock production in Nigeria,
which indicates the place of poultry sub-sector in the livestock industry.
Poultry meat and eggs play a very useful role, not only in providing income to
the farmers but more importantly, in bridging the protein gap in Nigeria (Nwaru
and Nweke, 2008; Ume, Ezeano and Obiekwe 2013). The most widely accepted meat in Nigeria is chicken because of its high-quality protein.
Unlike beef or pork, it does not have any religious or health taboo. Also, eggs
are a very good source of vitamin A, iron and zinc, which are essential for
health, growth and well-being. Egg is a complete protein with excellent quality
(Food and Agriculture Organization, 2005; Tijjani, Alimi and Adesiyan 2006).
These
important roles played by poultry make imperative the need for financial
assistance for livestock farmers. Farm credit is among the essential factors
needed for agricultural production, and with it, farmers can secure farm inputs
such as; farm equipment and hired labour (Odoh, 2009). Farm credit is widely
recognized as one of the intermediating factors between adoption of farm
technologies and increased farm income among rural farmers in Nigeria (Omonona,
2008, Akpan, 2013). Consequently, a
general awareness on the significance of credit as a food for agricultural
development has been increasing (Omonona, 2018).
Credit
as asserted by Oladeebo and Oladeebo, (2008) is the ability to acquire goods
and services or money in swap for pledge for payment in future. The important
of credit to agricultural development cannot be overemphasized. Agricultural
credit is capable of improving the growth of agriculture through use of new
technologies, strengthening the position of the farmers in dispensing his/her
livestock, cushioning the effects of seasonal price disparity and enhanced
bargaining power, adopt improved agricultural practices and thus boost
production ethics, improves output and advances standard of living of people by
breaking vicious cycle of poverty (Ume, 2016), enhances access to improved
inputs, improves consumption and expenditure especially during off-season
period, boost access to basic social services, boost farmers welfare through
limitless access to vital social services and improves high production
efficiency for output maximization (Ezeano, 2014). Diagne and Zeller (2001)
opined that a household is said to have access if it is able to borrow from a
credit source (formal or informal). The level of access to credit is measured
by the maximum amount a household can borrow at a time from a given source.
Access to affordable agricultural credit enables farmers who constitute the
majority of population in most developing countries of which Nigeria is one, to
adopt new technology and take advantage of new economic opportunities to
increase production and income. The transfer is temporary and made for a price,
known as interest, which varies with the risk involved and with the demand for,
and supply of credit (Kimuyu and Omiti, 2000).
Such
credit can be short, medium or long term depending on its duration. Credit
institutions range from well-developed and large sized commercial banks to
localized small cooperatives. It can also be formal or informal.
Studies
shows that the farmers apart from their personal savings, formal institution
has been the major access to credit as their activities are monitored by government
(Lawal, Omonona, Ajani and Oni 2009; Osuntogun, 2012) and to debunk shylock
credit often associated with informal sector lending institutions available to
the farmers were Agricultural Credit Guarantee Scheme (ACGS), the Nigeria
Agricultural and Cooperative Bank (NACB), Microfinance and Commercial banks
(Lawal, 2009; Ibrahim and Aliero, 2012). In addition, the informal
sources available to the farmers are money lenders, personal savings, friends
and Rotating Savings and Credit Associations (ROSCAs) (Anozie, 2014).
Credit
is not obtained without some cost implications. Certain factors are considered
before it is availed to the beneficiary and one of such factors is the
beneficiaries ability to repay the credit which in turn is also determined by
many factors. Credit repayment performance could be influenced by a myriad of
factors such as interest rate, unstable prices of agricultural commodities and
the social relations and responsibilities of the borrower (Ugbomeh, Achoja,
Ideh and Ofuoku, 2008).Many other factors abound including membership of
Self-Help Group (SHG); a voluntary association of people at the grass roots
level to meet the challenges of economic and business activities in the rural
cash economy, like cooperative societies which has been described as a
user-owned and democratically controlled enterprise in which benefit is
received according to use.
Previous
studies by Adeyonu, (2017); Akpan (2013); among others ignored issues on access
to credit among rural farmers in Nigeria; majority of these literature are not
gender (male and female) sensitive. Considering the cultural setting and the
nature of environment where agricultural activities are practiced in Nigeria,
there is an overwhelming need to reconsider the issues of access to credit by
rural farmers. Globally there is a
growing recognition of the importance of gender equality on issue of access to
productive resources and the role of both men and women in agricultural
development. In fact, most international discourses and recent literature have also
acknowledged this fact. Provision of farm credit is one of such critical farm
policies that require reassessment by the policy makers in the farming sector.
Generally, agricultural sector has been considered by most people as a
masculine dominated sector; and especially when considering the gender
imbalances in the distribution of agricultural resources to the farming sector.
However, findings from a study financed by the United Nations Development
Programme (UNDP) revealed that women constitute about 60-80% of agricultural
labour force in Nigeria depending on the region (World Bank, 2003); and they
produce two-thirds of the food crops consumed in the country.
Poultry
enterprise is an emerging business in Abia State of which majority are located
in Aba metropolis. Commercial broiler and egg production are becoming very
popular among inhabitants of Abia state. Poultry farming is one of the major
sector that boost the economy of Abia State. Majority of the farmers are poor,
various approaches to empower them economically have been developed by Abia
State government through many policies (Abia News, 2019).
Most
of the modern poultry farms in Abia State include the following Aliji poultry
farm, peter-francis farm services, the Bro poultry services Union N. poultry
farm all in Aba metro political zone, Davicky integrated farms, Ndims poultry
farm in Umuahia just to mention but a few.
Access
to affordable agricultural credit enables farms who constitute the majority of
population in most developing countries of which Nigeria is one to adopt new
technology and take advantage of new economic opportunities to increase
production and income. The transfer is temporary and is made for price, known
as interest, which varies with the risk involved and with the demand for and
supply of credit (Kimuyu and Omitti, 2000).
1.2 PROBLEM STATEMENT
In
Nigeria the constraints poultry farmers faces in accessing financial services
can be classified into internal and external constraints (FASDEP, 2002). The internal
constraints are lack of collateral due to poor quality of farm assets, poor financial
management, risky nature of farm production and inability to prepare viable
project proposals. The external constraints are high interest rates, high cost
of service delivery to the sector and perception of financial service providers
about farming as being risky.
According
to Adegbite (2009), majority of the farmers in Nigeria are considered not to be
credit worthy by most formal credit institutions and still prefer to deny the
farmers access to their services. This posture is premised on the feeling that
most farmers are low income earners with low saving capacity, illiterate and
have no collaterals among others. On the part of the farmers, credits are not
disbursed timely; high interest rates and complex application procedure are
most recurrent (Adeyonu, 2017). And even when formal institutions advance
credits to the farm sector, the preference is for funding less risky and
shorter duration processing activities and trade, cold storage facilities and
large scale milling and ply wood manufacture, rather than for primary
production like poultry and fishery (Nimoh, 2013). Commercial banks generally
do not serve the needs of the poor farmers because of the perceived high risk
and the high transaction costs associated with credits and saving deposits.
Effort
to deliver formal credit and financial services to the poor farmers in Nigeria
have failed over the years (Adams, 2009; Otunaiya, 2014). To fill the void,
government tried to deliver formal credit to rural areas by setting up special
agricultural banks or directing commercial bank to give loan to rural farmers.
Despite government initiatives, agricultural credit still seems insufficient.
This insufficiency is due to several problems on the side of the financial
institution which could be as a result of supervision insufficiency, political
interference etc., (Ologbon, 2014). Moreso, these programs have almost failed
because of political difficulty for governments to enforce credit repayment and
often time the relatively wealthy farmers have better access to credit than the
poor farmers (Akerele, 2014).
However,
agricultural credit remain a critical means through many problems confronting
poultry farmers can be resolved. Primarily, it assists in breaking the chains
of the vicious cycles of poverty which is the main cause of low productivity
and low income of the poultry farmers (Bamiro, 2012). Unfortunately, the level
of credit available to these farmers is grossly inadequate and therefore,
limits the realization of their full potentials. Access to formal financial
services by the majority of the poultry farmers is highly limited. In Nigeria the
formal financial system provides services to about 35% of the economically
active population while the remaining 65% are excluded from access to financial
services (Central Bank of Nigeria, 2005). These 65% are often served by the
informal sector, through NGO-MFIs, friends, relatives, cooperative societies
and credit unions. This financial gap has been partly attributed to the
inadequacy in the distribution of formal institutions. Furthermore, there are
indications of problems relating to timing, conditions and size where credits are
made available to the farmers (Otunaiya, 2014).
Despite
the importance of credit in agricultural productivity its repayment is fraught with
a number of problems especially in small holder farming. In Nigeria, farmers
face a lot of problems in the acquisition, management and repayment of
agricultural credits. The poor repayment potentials of farmers to financial
institutions have been problematic that most formal sector often decline in
lending to such farming class through use of an uphill condition for
acquisition and use of the credit (Osuntogun, 2012). However, the default or
delinquency in repayment of agricultural credit by the farmers could be linked
to the inherent nature of agriculture as relates to risks and uncertainties in
output production and prices, resulting in poor economic returns to farming
household (Ugomeh, 2008).
One
of the major problems confronting small and medium scale poultry farmers in
Abia State is poor access to adequate credit. This is despite that the category
of farmers produces the bulk of the domestic agricultural output (Eze and
Ibekwe, 2001). Unfortunately, several factors are perceived to be responsible
for this dismal situation.
Other
problems include increase in default rate of agricultural credit which have
made the sector non-viable as it gives a negative margin (NBS, 2006). High
default rates were identified as a major reason which makes banks reluctant to
give credits to farmers (Otunaiya, 2014). The study further explained that
problems arose from the inability of the credit institutions to distinguish
lending for urban project and small scale farming.
In
Abia State poultry farmers encounters many obstacles in accessing credit, the
Abia State government in a bid to encourage self-reliance and less dependence
on government has decided to encourage farmers, both rural and urban by
exposing them to easy and better ways to source for fund (through central bank
of Nigeria) in other to grow their farming business. In other to achieve this
government initiated programmes, commercial agriculture credit scheme and Micro
financing (Abia News, 2019).
In
the same vain, to mitigate the problem poultry farmers encounter in Abia State.
The State government in partnership with the central bank of Nigeria in a
programme known as Accelerated Agricultural Development Scheme (AADS) has
launched a 55,000 capacity ultra-modern poultry cluster in Umuosu Nsula, Isiala
Ngwa LGA of the State, with the sole aim of promoting the poultry production in
the State beget wealth and reduce the unemployment rate (Abia News, 2019).
1.3 RESEARCH
QUESTIONS
This
study was undertaken to examine access to credit and repayment potentials among
male and female poultry farmers in Abia state, Nigeria. Previous studies by
Abu, (2010); Adeyonu, (2017); Akpan, (2013); Ezihe, (2016), Yasir, (2012), Adesiji,
(2011), examined different problems associated with agricultural credits but
failed to critically examine male and female access to credit and their
repayment potentials. If poultry farmers need agricultural credit to overcome
their production problems, then questions arise such as:
i.
What are the socio-economic
characteristics of male and female poultry farmers in Abia State?
ii.
What are the level of
access to credits among male and female poultry farmers in Abia State?
iii.
What are the mode of
credit use among male and female poultry farmers in Abia State?
iv.
What are the factors
influencing credit access among male and female poultry farmers in Abia State?
v.
What are the factors
influencing credit repayment potentials among male and female poultry farmers
in Abia State?
vi.
Are there differences in
credit repayment between male and female poultry farmers?
vii.
What are the problems
encountered in accessing credits among male and female poultry farmers in the
study area.
1.4 OBJECTIVES OF THE STUDY
The
broad objective of this study is to examine access to credit and repayment
potentials among male and female poultry farmers in Abia state, Nigeria.
The
specific objectives are to:
i.
describe the socio-economic
characteristics of male and female poultry farmers in Abia State;
ii.
examine the level of access
to credit among male and female poultry farmers in the study area;
iii.
describe the mode of
credit use among male and female poultry farmers in the study area;
iv.
estimate the factors
influencing credit access among male and female poultry farmers;
v.
determine the factors
influencing credit repayment potentials among male and female poultry farmers;
vi.
estimate the differences
in credit repayment between the male and female poultry farmers in the study
area;
vii.
identify the problems
encountered in accessing credits among male and female poultry farmers in Abia
State.
1.5 HYPOTHESES OF THE STUDY
The
following hypotheses were tested:
HO1: There is no significant
difference in the level of access to credit among male and female poultry farmers.
HO2: There is no significant
difference in credit repayment among male and female poultry farmers.
1.6 JUSTIFICATION OF THE STUDY
Access
to credit whether cash or in kind is a major source of poverty alleviation in
developing countries like Nigeria (Signe, 2005). Credit is one of the fundamental
ingredients of sustainable agricultural production; as such its accessibility
and demand is among the prerequisite for attaining the national goal of
reducing rural poverty and ensuring self-food sufficiency in the state and
country at large. Credit is considered essential to the process of improving
poultry farming and transformation of the rural economy.
According
to Mohamood, (2009) the introduction
of easy and cheap credit is the quickest way for boosting production. It is
from the foregoing backdrop that this study is justified and will be useful in
numerous ways. The finding of this study will be of essence in understanding
the nature of the constraints farmers participating in credit market face in
order to effectively help these farmers because failure to take into account
male and female relations leads to the marginalization of the disadvantaged
sector of the society and a large part of the agricultural workforce. It will
equally provide the much needed micro level data and the empirical basis for
farm planning; afford to neglect the needs, rights, aspirations and
contributions of half of its population. It will ensure policies that will
improve the productivity of male and female poultry farmers as well as
information on relative male and female repayment potentials, access to credit
and control over resource will be important in the development of food security
strategies.
Nevertheless,
the repayment of credits is very beneficial as it helps to ensure the recycling
of money to other farmers, as poor repayment has the probable of lending
agencies charging high interest rate and high processing charge to the
borrowers in order to keep afloat in the business, thus repelling other
possible beneficiaries (Ume, 2018). It is paramount to state that the borrowers
alone cannot be held accountable for credits defaults as it is imperative to
scrutinize the level to which both borrowers and lenders abide by the credit agreement
and the nature of the duties, responsibilities and duties of both parties as
revealed in the plan of the credit programme (Ezeano and Obiekwe, 2018).
The
finding of the study will also provide a basis for equitability, effective and
better allocation of credit among male and female poultry farmers. This study
will add to the already existing literature on production which may aid further
researchers in other geographical areas. It will also be useful to potential
investors interested in poultry farming in Abia State. It can also provide
useful information, which will help in decision making for improvement of poultry
farming in Nigeria. The findings of the study will also be of immense benefits
to researchers as well as policy makers on the need to keep the government at
various levels abreast with the economic value of poultry. It will be used for
teaching purposes.
1.7 SCOPE OF THE STUDY
In
view of the need for an effective work, this study was targeted to examine
access to credit and repayment potentials among male and female poultry farmers
in Abia State, Nigeria. The area of study was selected randomly. The inhabitants
are mostly farmers and engaged in the rearing of various types of animals like
sheep and goat, piggery, rabbits, poultry etc, for both domestic and commercial
purposes.
1.8
LIMITATIONS OF THE STUDY
During
the course of this study the researcher encounter some limitations which are; financial
problems which affected and delayed the collection of data for the study;
Bio-war or Bio- insecurity which was caused by outbreak of Coronavirus
(COVID-19) World-wide which occurred in the year 2020 in Nigeria when the
researcher was at the verge of completing the study.
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