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Inadequate support in terms of credit facilities from government and financial
institution has been identified as one of the major problem affecting farming
operation particularly that of the small scale farmers in Nigeria. This study
analyzed the impact of credit facilities to the operation of small scale farms in
Nigeria using BENDE Local Government as a case study. Questionnaires were
used to source the data used in carrying out this research. The research design
employed for this study was a descriptive survey design, in order to achieve an
accurate representation of the entire population. The study makes use of simple
random sampling technique as the method of data analysis. However, one strong
outcome of this study is that the poor state of credit facilities to small scale farmers
in Nigeria has drastically affected farming operation, thus, reduction in agricultural
output, leading to importation of Agricultural product. Credit facilities therefore
plays a crucial role in the operation of small scale farming, this ensures the derived
output which sustain the growth and development of the economy.
Title Page – – – – – – – – – – -i
Approval Page – – – – – – – – – -ii
Dedication – – – – – – – – – – -iii
Acknowledgement- – – – – – – – – -iv
Abstract – – – – – – – – – – -vi
Table of Content – – – – – – – – – -vii
Chapter One
1.0 Introduction – – – – – – – – – -1
1.1 Background of the Study- – – – – – – -1
1.2 Statement of Problem – – – – – – – -3
1.3 Objective of the Study – – – – – – – -4
1.4 Statement of Hypothesis – – – – – – – -4
1.5 Scope of the Study- – – – – – – – -5
1.6 Justification of Study – – – – – – – -5
1.7 Organisation of Study – – – – – – – -6
Chapter Two
Literature Review
2.0 Introduction – – – – – – – – – -7
2.1 Conceptual Issues – – – – – – – – -9
2.2 Overview of Credit Scheme to Farmers in Nigeria – – – -9
2.3 Empirical Literature Review – – – – – – -44
2.4 Conclusion – – – – – – – – – -45
Chapter Three
3.0 Research Methodology – – – – – – – -47
3.1 Introduction – – – – – – – – – -47
3.2 Research Design – – – – – – – – -47
3.3 The Research Population – – – – – – – -48
3.4 Sampling Frame and Sampling Unit – – – – – -48
3.5 Sampling Method – – – – – – – – -49
3.6 Sample Size – – — – — – – – — -49
3.7 Method of Data Collection – – – – – – -49
3.8 Method of Data Analysis – – – – – – – -49
Chapter Four
Results and Discussion of Findings
4.0 Introduction – – – – – – – – 51
4.1 Demographic Data – – – – – – – – 51
4.2 Presentation of Selected Variable Based on Descriptive Statistics 55
4.3 Research hypothesis – – – – – – – 61
Chapter Five
Summary, Conclusion and Recommendation
5.1 Summary – – – – – – – – – 64
5.2 Conclusion – – – – – – – – – 65
5.3 Recommendation – – – – – – – – 65
Bibliography – – – – – – – – – -68
Journals – – – – – – – – – – -71
Questionnaire – — – – – – – – – -73
List of Tables
Table 4 – 1: Distribution of respondents by sex
Table 4:2: Distribution of respondents by Age
Table 4:3: Distribution of respondents by marital status
Table 4.4: Distribution of respondents by Religion
Table 4:5: Distribution of respondent by Educational Qualification.
Table 4.2.6: Respondent cost on farm operation per year.
Table 4.2.7: Respondent income received externally to finance farm operation
Table 4.2.8: Respondent duration to access credit facilities needed to finance
farm operation.
Table 4.2.9: Respondent Assessment of the state of credit facilities of small scale
Table 4.2.10: Respondent percentage of interest rate favourable to them
Table 4.2.11: Respondent benefit from subsidies within the past years
Table 4.3.1: Response on research question
Agriculture according to Longman Dictionary of Contemporary English (New
Edition) is the science or practice of farming.
Agriculture has a key role to play in the economic development of Nigeria, it is a
leading sector in any meaningful economic development being carried out by any
nation such as ours. Agriculture as its output tends to contribute significantly in the
areas like employment opportunities, provision of food to the increasing
population, contribution to GDP where the country is able to earn foreign
exchange, also the provision of raw materials to our local industries particularly the
agro-allied industries for further production.
An overview of Nigerian agricultural sector during 1960’s revealed that
agricultural sector was the most important to the economy. In fact, the generation
of this period can still remember those days when the pyramid of groundnut was
the pride to the northern region and cocoa production areas of the west also
boosted the foreign earning from cocoa exports. Today, the nation is still not
independent in terms of agriculture providing food for its people to feed on.
Credit is an important instrument for improving the welfare of the poor directly
through consumption smoothening that reduces their vulnerability to short-term
income. It also enhances productive capacity of the poor through financing
investment in their human and physical capital. The demand for credit for
productive investments usually comes from the poor who are less risk-averse and it
enables them to overcome liquidity constraints, making it possible to undertake
investments that can boost production, employment and income. Financial
intermediaries have not been able to accommodate small-scale farmers because it
is risky and a different task associated with high transaction costs. Lack of
information prevented large formal leaders who had capacity to serve the smallscale farmers and the poor from doing so. It is undisputable that small-scale
farmers have always had a problem of access to credit facilities. To improve the
access, improvements need to be made in the provision of financial services. In
order to implore financial services, leaders need to consider the preferences and
socio-economic condition of clients. This contributes to both regulatory process as
well as product development – thus, an understanding of characteristics influencing
farmers’ decision to use agricultural credit could assist policy formulation that
could enhance welfare of the poor or those excluded from access to credit
The poor performance of Nigerian agriculture and its attendant effect prompted
government to seek and reverse the situation which was demonstrated in the
policies and practice such as National Accelerated food production programme
(NAFPP), Operation Feed the Nation (OFN), Green Revolution Programme
(GRP), Accelerated Crops Production Programme Scheme (ACPS) and
international organisation like the World Bank. This includes some of the steps
taken by the Federal Government of Nigeria to assist farmers to boost agricultural
production in the country.
In spite of the remarkable contribution of the agricultural sector to the GDP,
findings over the years here shown that government subsidies directed at the
agricultural sector have drastically reduced and as such the dwindling fall in
agricultural productivities and by extension agricultural development. In Nigeria,
as in most developing countries, “lack of credit facilities has been regarded as the
major constraint farmers face when they try to improve economic activities and/or
living conditions” (Britain, 1986: Biswanger et al, 1993: Agbor, 2004). Even when
available, access to credit facilities is difficult to access by farmers in the rural area
despite the fact that it is an essential input in production (FARM, 2006). This could
be adduced to lack of information and collateral securities among farmers.
Furthermore, the behaviours of financial institutions set up to finance agriculture
revealed that funds necessary to induce agricultural productivity has not been
geared toward agricultural sector. Commercial banks in particular are skeptical
towards financing agricultural activities and in most cases do not offer friendly
interest rate to encourage farmers to acquire loans. This research study shall
examine the analysis of credit facilities to small scale farmers in Nigeria.
The specific objectives of the analysis of credit facilities to small scale farmers are:
i. To analyze the impact of credit facilities to the operation of small scale
farmers in Nigeria.
ii. To identify and analyze the socio-economic characteristics that may
influence farmer’s decision about whether or not to use credit.
iii. To examine the probability that non-borrowers can borrow given that socioeconomic characteristics are increased.
Given the nature of this research work there is need to formulate a reasonable
H0: credit facilities are not significant in the operation of small scale farmers in
H1: Credit facilities are significant in the operation of small scale farmers in
The scope of this study shall cover the role of credit facilities to small scale
farmers in Bende L.G.A in Abia state. This study shall encompass the nature, the
structure of availability of each facility as well as measurement of relative
accessibility to small scale farmers in Nigeria.
The concern of credit facilities as a factor input has been amplified by different
experts and government itself has the potentials of opening new doors of
opportunities in the development of small-scale farming in Nigeria.
There are few studies on the subject of small scale farm credit and how their socioeconomic characteristics influence their decision about whether or not to take
credit. The development of the sector is not feasible if an avenue of credit facilities
is not provided. Therefore, this research work is directed at providing insight into
this less studied dimension in agriculture by eliciting and analyzing small scale
farmers’ socio-economic factors that affect their decision about credit facilities,
and also to evaluate the nature, structure and pattern of credit facilities to small
scale farmers in Nigeria.
This study is divided into five chapters. Chapter one contains the introduction of
the study, chapter two deals with the review of relevant literature and theoretical
framework, while chapter three presents the research methodology which
embodies specification of estimating techniques. Chapter four reveals the
presentation and discussion of results and findings, while summary of findings,
conclusion and recommendation are provided in chapter five.


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