COMPARATIVE STUDY OF LOAN REPAYMENT AND DEFAULT BY LARGE AND SMALL SCALE FARMER-BENEFICIARIES OF BANK OF AGRICULTURE LOANS IN ANAMBRA STATE, NIGERIA
ABSTRACT
The study examined loan repayments and defaults by large and small scale farmer-beneficiaries of Bank of Agriculture (BOA) loans from 2010-2016 in Anambra State, Nigeria. The specific objectives were to: estimate the total amount of applications and disbursements to large and small scale farmer-beneficiaries of BOA loans; examine the total amount of repayments and defaults by large and small scale farmer- beneficiaries of BOA loans; establish the determinants of loan repayment by the large and small scale farmers; ascertain the determinants of loan default by the large and small scale farmers; identify constraints to loan administration by the BOA; and establish problems militating against loan repayment/default by the farmers. A multistage sampling procedure involving purposive and random sampling methods were used to select 256 respondents for the study. Data were collected from both primary and secondary sources. Primary data were collected using two sets of questionnaire; one for the farmers and the other for the bank officials while secondary data were sourced from loan transaction records in the headquarter and branch offices of BOA in the State. Collected data were analyzed by means of descriptive statistics and multiple regression technique. Findings indicated that the large scale farmers were more advanced in age, more educated, had higher years of farming experience, number of persons in the household and number of males among them than the small scale farmers, who however, were better at repayment. Majority (60.00%) of applications and 60.33% of disbursements to the large scale farmers were for poultry and fish production while the small scale farmers’ most (53.28%) applications and disbursements (53.26%) were for the production of crops. Significant determinants of loan repayment by the large scale farmers were educational level of the farmer, annual farm income, total annual income, amount of loan disbursed and interest rate, and for the small scale farmers were gender of the farmer, annual farm income, total annual income, amount of loan disbursed and interest rate. The significant determinants of loan default by the large and small scale farmers were gender, educational level, annual farm income, total annual income, amount of loan disbursed and interest rate. Constraints to loan repayment arranged in descending order of seriousness were poor returns from sale of product, low market price for product, family commitment, delay in loan disbursement, high cost of production, high interest rate, and pest and disease attacks. The most serious constraint to loan administration by the bank staff was low repayment rate, followed by inadequate fund for lending, insufficient staff for credit administration, inadequate collateral provision, loan diversion by beneficiaries, high administrative cost, supply of false data by the farmers, and the least, bureaucratic/logistic challenges. The provision of more funds, more skilled staff and adequate logistics to the BOA by government; timely disbursement of approved amount, minimization of bureaucratic procedure involved in the administration of the facilities and lowering the interest rate further; by the BOA; and formation of more cooperative groups and adding value to the products by the farmers will ensure reduction of loan diversion, more income, better repayment and less default by the beneficiaries, and sustainability of the scheme.