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ISSN : 2456-8643

Title:
EVALUATION OF MICRO-CREDIT SOURCES, INTEREST RATES AND ADEQUACY OF CREDIT ADVANCED TO FARMERS IN EDO STATE: IMPLICATIONS FOR ENHANCING FOOD SECURITY AND LIVELIHOODS IN NIGERIA

Authors:
Effiong, J.A.L .,Aligbe, J.O ., Onyeneke, R.U and Ibe, G.O,Nigeria

Abstract:
The study examines sources of micro-credit, interest rates and adequacy of credit advanced to arable crop farmers in Edo State, Nigeria. Multi stage random sampling procedure was used in selecting 150 arable crop farmers in the study area. Data were collected with the pre-tested questionnaire and analyzed using descriptive techniques such as mean, frequency distribution, percentages and t- test statistic. The study revealed that micro-credit lending from friends attracted interest rates ranging from 2% to 5%. Credit from family members did not attract any interest rate. Osusu charged interest rates that ranged from 2% to 3%, while Micro-finance Banks charged between 5% to 9% interest. Co-operative societies charged interest rates of between 2% and 3% while Commercial Banks charged the highest interest rate of between 20% and 24% on micro-credit. With the exception of commercial banks whose micro-credit term may extend up to 24 months all others had 12 months. Shortness of repayment time and selling off farm products even when prices are low in order to repay loan are the major problems facing farmers in acquiring and managing credit obtained. The study recommends the need to shore up the capital base of informal credit providers to improve their capacity to disburse high loan sums to farmers. This is expected to improve farmerís ability to generate high annual turnover and hence break the vicious cycle of poverty. International agencies targeting poverty alleviation among rural populace can channel such assistance through informal micro-credit providers. Attempt should be made by micro-credit providers to extend the loan term from 12 months to 2 years as it would give farmers sufficient time to sell their farm products off at remunerative prices. Effort should also be made by farmers in efficiently utilizing credit so as to boost their productivity and income as it will go a long way to improve their loan repayment performance and hence livelihood.

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