University of Nigeria

Research Publications

NWONYI, Frances. N

Aut

hor

PG/M.SC/95/21544

Title

An Assessment of the Performance of Agricultural Credit Guarantee Scheme Fund in Enugu State 1992

to1996

/Fac

ulty

Agriculture

Dep

artm

ent

Agricultural Economics

Dat

e January, 1999

Sign

atur

e

AN ASSESSMENT OF THE PERFORMANCE OF AGRICULTURAL CREDIT GUARANTEE SCHEME , F U N D IN ENUGU STATE 1992 TO 1996.

NWONYI FRANCES NGOZI PG/MSC/95/21544

DEPARTMENT OF AGRICULTURAL ECONOMICS, UNIVERSITY OF NIGERIA

NSUKKA

SANUARY, 1999

AN ASSESSMENT OF THE PERFORMANCE OF AGRICULTURAL CREnTT GUARANTEE SCHEME FUND IN ENUGU STATE 1992

TO 1996

A DZSSERTATION SUBMITTED TO THE DEPARTMENT OF AGRICULTURAL ECONOMICS, UNlVERSITY OF NIGERIA, NSUKKA, IN PARTIAL FULFILMENT OF THE AWARD OF MASTER OF SCIENCE IN AGRICULTURAL ECONOMICS

NWONYI FRANCES NGOZI

PG]~Sc/95/21544

C E R T I F I C A T I O N

, FMNCES NGOZI NWONYI, a Postgraduate Student

in the department of Agricultural Economics and with

the Registration Number PG/M.Sc.l95/21544 has

satisfactorily completed the requirements for the

degree of Master of Science in Agricultural Economics.

The work embodied in this dissertation is original

and has not been submitted in part or full for any

other diploma or degree of this or any other University.

DR . E. C. OKORYI SUPERVISOR

BR . E.C. OKORJI HEAD OF DEPARTMENT

Date Date

DEDICATION

T h i s work i s d e d i c a t e d to my mother,

Mrs. L. U. NWONYI

iii

ACKNOWLEDGEMENT

I am sincerely grateful to all who have rendered

help, encouraged me and ensured the successful completion ,

of this work.

I am particularly most grateful to my supervisor

h. . E . C . Okorji whose enduring patience and commitment

was a source of inspiration for this study. The candid

advice and attention enjoyed from him is still green

in my memory. I am particularly challenged by his

humility and hard work.

. ,.. My unreserved gratitude goes to .:.-pro-

f e s s o y . E . C. Nwagbo and all the lecturers

in the -department, their criticisms and corrections' :'.

was a useful guide during proposal and analysis.

I appreciate the assistance and guidance of

Mr. G.O. Odigbo and Dr. Kalu Orji. Of course, this

work is not complete without mentioning 11.0. Nwankwo,

Pat Chukwubike, Moses Mmaduabuchi, Dom, Ben, Victor

and others who contributed in various ways to the

success of the work. They deserve my hearty thanks.

A b o v e a l l , I thank G o d , t h e A l m i g h t y , w h o

makes a l l t h i n g s p o s s i b l e .

NWONYI FRANCES N G O Z I D E P T . O F A G R I C . ECONS. U N I V E R S I T Y O F N I G E R I A , NSUKKA.

ABSTRACT

A study of an assessment of the performance of

Agr icu l tu ra l Credi t G u a r a ~ t e e Scheme Fund (ACGSF)

i n Enugu S t a t e 1992 t o 1996 was c a r r i e d o u t . Random

sampling technique was used t o s e l e c t t h e respondents.

Primary and secondary da ta were analysed using descr ip-

t i v e s t a t i s t i c s such a s frequency t a b l e s , percentages,

means and s tudent t ~ - test: s t a t i s t i c s .

T.he8major f indings were t h a t t h e loans were

very small and no t disbursed on time. It was found

t h a t indiv idual farmers were favoured more than t h e

corporate bodies while the co-operat ive s o c i e t i e s

were the l e a s t favoured. Food crops were give more +; .

a t t e n t i o n by the scheme than l ives tock and cash etop . , :. was the l e a s t . The problems a f f e c t i n g loan repayments

were i d e n t i f i e d and they include l a t e disbursement,

delayed processes of documents, d i s t ance t o bank, e t c .

The problem of t h e lending banks was mostly high cos t

of supervis ion . The major f a c t o r s t h a t inf luenced

patronage of t h e scheme were: age, household s i z e ,

l e v e l of education and gender.

The recommendations made include: the numbers and

value of loan administered be increased; amount of

loan for which collateral is waived be increased \

from W10,000 to W20,OOO; there should be a balance in

the loan administered for food crop, cash crop and

livestock to maintain a balance in all aspects of

farm produce. The numbers of corporate bodies and

co-operative societies given loan should be increased

for improved food production. Incentives to make

work of the credit officers more interesting and

challenging should be devised.

TABLE OF CONTENT

C e r t i f i c a t i o n

D e d i c a t i o n

Acknowledqement

A b s t r a c t

T a b l e o f C o n t e n t s

~ , i s t o f . T a b l e s

L i s t o f F i g u r e s

L i s t o f Appendix

CHAPTER ONE INTRODUCTION

1.1 - ~ a c k ~ r o u n d I n f o r m a t i o n ... 1 . 2 Problem S t a t e m e n t ... 1 . 3 O b j e c t i v e s o f t h e S t u d y . .- 1 . 4 R e s e a r c h Hypo theses ...

... 1.5 J u s t i f i c a t i o n o f t h e S t u d y

1 . 6 L i m i t a t i o n s o f t h e s t u d y ... 1 . 7 P l a n o f t h e s t u d y

CHAPTER TWO LITERATURE REVIEW

2 . 0 . Preamble ... 2 . 1 Meaninq and O r i g i n o f A g r i c u l t u r a l

C r e d i t i n N i g e r i a

i

ii

iii .

v

v i i i - . i x

Types and S o u r c e s o f F i n a n c e f o r

f a r m e r s

Role o f C r e d i t t o A g r i c u l t u r a l 19

Development ... Problems and P r o s p e c t s o f A g r i c u l t u r a l 2 2

C r e d i t i n N i g e r i a ... A q r i c u l t u r a l C r e d i t Guaranteescheme 3 0

D e l i v e r y System ... O r i g i n o f A g r i c u l t u r a l C r e d i t G u a r a n t e e 3 0

Scheme Fund (ACGSF) ... O b j e c t i v e s o f ACGSF ... 3 1

S t r u c t u r e and O p e r a t i o n s o f ACGSF --• 3 2

P r o c e d u r e s o f ACGSF . -. ,, . ,.. : 34 . r

Moni to r inq s y s t e m o f ACGSF ... ? , 3 6

Amendment o f ACGSF ... 3 7

CHAPTER THREE MEDTHODOLOGY

3 . 1 S tudy Area .... 38

3 .2 Samplinq p l a n .... 3 9

- 3 . 3 D8ta C o l l e c t i o n .... 40

3.4 A n a l y s i s o f Da ta .... 40

CHAPTER FOUR RESULTS AND DISCUSSIONS

4 . 1 S o c i o - . ~ c o n o m i c c h a r a c t e r i s t i c s o f 42

Respondents

Age d i s t r i b u t i o n o f r e s p o n d e n t s . . . 42

Household s i z e o f r e s p o n d e n t s . . . 43

E d u c a t i o n a l a t t a i n m e n t of r e s p o n d e n t s . . .... 45

Sex o f r e s p o n d e n t f a r m e r s .... 4 7

M a r i t a l s t a t u s of r e s p o n d e n t s .... 4 7

Occupa t ion o f r e s p o n d e n t s ..... 48

Annual Income l e v e l o f Respondents . . . . . . 49

O p e r a t i o n o f ACGSF ...... 50

T o t a l number and v a l u e o f l o a n guaran tked ...so

by c a t e q o r y o f bor rowers and purpose

Loan Guaranteed by c a t e q o r y o f b o r r o w e r s . . . 52

S t r u c t u r e o f l o a n q u a r a n t e e d by purpose ,,, 53

Loan repayment and f a c t o r s t h a t a f f e c t ... 58

l o a n repayment -.. .\!> . . .-i

Amount o f l o a n r e p a i d and repayment r a t , e s . , . 5 8

F a c t o r s a f f e c t i n g l o a n repayment . . . 5 9

Problems f a r m e r s e n c o u n t e r . . i n borrowing . . . 6 1

Problems Banks encoun te red i n l o a n d i s - ... 62

bursement and r e c o v e r y

Impact o f l o a n a c q u i s i t i o n on i n p u t c o s t ... 64

and on t h e l e v e l o f farm o u t p u t

Comparison o f c o s t o f i n p u t u t i l i z a t i o n o f , , 64

b e n e f i c i a r i e s w i t h i n p u t c o s t o f non-

b e n e f i c i a r i e s .

Comparison o f l e v e l o f o u t p u t of b e n e f i c i a r i e s 6 3

w i t h n o n - b e n e f i c i a r i e s

LIST O F TABLES

T a b l e P a P

4 . 1 Aqe d i s t r i b u t i o n of r e s p o n d e n t s ...... .... 4.2 S i z e d i s t r i b u t i o n o f r e s p o n d e n t s h o u s e h o l d 4 4

4 .3 D i s t r i b u t i o n o f r e s p o n d e n t s a c c o r d i n g t o

l e v e l o f e d u c a t i o n ...... 46

4 . 4 D i s t r i b u t i o n o f r e s p o n d e n t s a c c o r d i n g t o

Seconda ry o c c u p a t i o n ...... 4 .5 Income d i s t r i b u t i o n o f r e s p o n d e n t s ...... 4.6 T o t a l number and v a l u e o f l o a n g u a r a n t e e d

t o f a r m e r s i n Enugu S t a t e . . . . . .

4 .7 F requency d i s t r i b u t i o n o f number and v a l u e 3:; . :*

.... o f l o a n g u a r a n t e e d by c a t e g o r y of borrowerg 52

4 .8 F requency d i s t r i b u t i o n o f number o f l o a n 54 ....... q u a r a n t e e d by p u r p o s e

4 . 9 F requency d i s t r i b u t i o n o f the v a l u e o f

.... l o a n g u a r a n t e e d by p u r p o s e . .

4.10 F requency d i s t r i b u t i o n of l o a n e d amount

and t h e r epaymen t ra tes

4 . 1 1 F requency d i s t r i b u t i o n o f p r o b l e m s e n c o u n t e r e d

by f a r m e r s i n l o a n r epaymen t ...... 60

4.12 F requency d i s t r i b u t i o n o f p r o b l e m s e n c o u n t e r e r e d

by f a r m e r s i n b o r r o w i n g ...... 6 1

4.13 F requency d i s t r i b u t i o n o f pmoblems

e n c o u n t e r e d by b a n k s i n loan d i s b u r s e m e n t

...... and r e c o v e r y

4 . 1 4 Comparison o f i n p u t cost o f b e n e f i c i a r i e s

w i t h i n p u t c o s t o f n o n - b e n e f i c i a r i e s on

sole R i c e p r o d u c t i o n o f o n e h e c t a r e ...... 4.15 c o m p a r i s o n o f i n p u t cost o f b e n e f i c i a r i e s

w i t h i n p u t c o s t o f n o n - b e n e f i c i a r i e s o n

...... s o l e c a s s a v a p r o d u c t i o n 66

4 .16 Comparison o f i n p u t c o s t o f b e n e f i c i a r i e s

w i t h n o n - b e n e f i c i a r i e s on s o l e yam p r o d u c t i o n ... 6 3

4.17 Comparison o f l e v e l o f o u t p u t o f >., .

- - b e n e f i c i a r i e s w i t h non-benef i c i a r i e s o n s&e 5.

R i c e P r o d u c t i o n . ..... 69

4 .18 Comparison o f l e v e l o u t p u t o f b e n e f i c i a r i e s

w i t h n o n - b e n e f i c i a r i e s o n s o l e c a s s a v a

. . p r o d u c t i o n ..... 4 . 1 9 Comparison of l e v e l o f o u t p u t o f b e n e f i c i a r i e s

... w i t h n o n - b e n e f i c i a r i e s o n s o l e yam p r o d u c t i o n 71

FIVE SUMMARY, CONCLUSION AND

RECOMMENDATION

Summary

Conclusion

Recommendation

References

Appendix

LIST OF FIGURE

Figure

1. Map of Enugu S t a t e . . . . . . . . . . . . . . . . . . . . . . . . . 4 1 ~

LIST OF APPENDIX

Questionnaires for Respondents ...................

CHAPTER ONE

I N T R O D U C T I O N

Background Informat ion

Agriculture has been the mainstay of Nigeria's

economy contributing over 65% of the country's gross

domestic product (GDP), (Ukpong and Malawi, 1991). In

sub-saharan Africa, aggregate GDP growth in 1991 was 2.7%

and agriculture contributed 1.2% compared to industry's

0.7% and 0.8% for services (F.A.O., 1992). Agriculture J * . .

has also -engaged more than 57% of the work force in"'. ..i

Nigeria (CBM, 1994). 3

However, the contribution of agriculture to Nigeria's

economy has been decreasing over the years. Balogun and

~ ~ ~ & ~ ~ ~ ~ k ~ " . ' (1986). , acknowledged that the relative

contribution of agriculture to the GDP hasbeen in decrease

and they ascribed it to the effect of oil boom periods of

1970s and 1980s. Nevertheless, agriculture remains

immensely important even though its contribution is moving

at a slower pace than other sectors (FMA, 1978) Famoriyo

and Nwagbo, 1981).

The dec reas ing r a t e of r e t u r n s from a g r i c u l t u r e

has been a t t r i b u t e d t o vary ing f a c t o r s among which i s

poor f i n a n c i a l s t a t u s of t h e r u r a l fa rmers . Although

t h e y produce over 90% of t h e c o u n t r y ' s food and f i b r e ,

t hey a r e u t t e r l y neg l ec t ed ( F a l u s i and Olayide , 1980) .

Inadequacy of c r e d i t t o t h e fa rmers pose a major o b s t a c l e

t o i n c r e a s e i n a g r i c u l t u r a l p r o d u c t i v i t y and r u r a l income.

In o r d e r t o a l l e v i a t e t h i s s i t u a t i o n , a g r i c u l t u r a l

c r e d i t must be regarded a s an e s s e n t i a l i n g r e d i e n t f o r

t h e farm fami l i -es (FMA, 1974). Von Pischke and Adams

(1980), acknowledged t h e importance of c r e d i t by s t r e s s i n g

t h a t l oan a c c e l e r a t e s t e c h n o l o g i c a l changes i n farming ; '.. . \ :. .

and t h a t . f o r m a 1 c r e d i t r e l e a s e s peasan t s from dependence 7:

on money l e n d e r s .

C red i t f o r a g r i c u l t u r e could be from formal and

in formal s o u r c e s . C red i t provided by most of t h e p r i v a t e

banks ( formal) a r e ' u s u a l l y a t t a c h e d t o t a n g i b l e s e c u r i t y , w h i c h

fnr lncrs cannot a f f o r d . It a l s o r e q u i r e s e x t e n s i v e

r e c o r d s , r e d tapism and documentat ion, which n o t on ly make

i t c o s t l y bu t a l s o c i r c u i t o u s t o o b t a i n . Banks expec t

farmers t o produce accep tab l e s e c u r i t i e s , open bank accounr?

and preseri t p roposa l , most of which a r e a l i e n t o t h e f a rmer s ,

b e f o r e l a a n can be admin i s t e r ed (Chidebelu , 1983) . However,

sma l l -ho lde r f a rmer s u s u a l l y r e s o r t t o r e l a t i o n s , f r i e n d s

.and p r o f e s s i o n a l money l e n d e r s who a r e l e s s p a r t i c u l a r . about c o l l a t e r a l s e c u r i t y s i n c e t h e i r l e n d i n g o p e r a t i o n s

a r e based on i n t imacy w i t h t h e borrower. Th i s ar rangement

though r i s k y t o t h e l e n d e r s , a t t r a c t l a r g e p r o f i t . Farmers

do n o t have b e t t e r a l t e r n 2 t i v e because t h e i n s t i t u t i o n a l

c r e d i t f a c i l i t i e s a r e o f t e n i n s u f f i c i e n t and e n t a i l d e l a y s

and e x t e n s i v e p r o c e s s e s .

I n a b i d t o a r r e s t . t h e d e a r t h of c r e d i t opening t o

Niger ian f a r m e r s , t h e government came up w i t h v a r i o u s

programmes w i t h a view t o p r o v i d i n g l o a n a t a conces s iona ry

i n t e r e s t - r a t e s t o f a rmer s . Schemes were introduced.:among . .

which was t h a t of 1930 e s t a b l i s h e d t o c a t e r f o r mihhd '

fa rming i n t h e former Nor thern N i g e r i a (Oluwasanmi and

Alao; 1964) , schemes by bo th s t a t e s , r e g i o n a l and f e d e r a l

government were a l s o e s t a b l i s h e d . Other ex t r a -budge t a ry

a t t e m p t s t o ex tend fund t o f a rmer s th rough schemes such

a s Na t i ona l D i r e c t o r a t e o f Employment (NDE) on ly ended

i n pumping exces s l i q u i d i t y t o t h e economy a s t h e fund was

channe l l ed t o n o n - a g r i c u l t u r a l u s e s (Maduabuchi; 1990) .

The C i r e c t o r a t e f o r Food, Road and Rura l I n f r a s t r u c t u r e

(DF'RIIL) was ano the r a t t emp t t o g i v e fa rmers a more adequa te

a c c e s s t o l o a n f a c i l i t i e s , b u t i t s f a c i l i t a t i n g f u n c t i o n s

were marred by l a c k of adequa te i n f r a s t r u c t u r e , i l l i t e r a c y

and r e a c h (NDE, 1995)

The need f o r f a rmer s t o have l e s s r i g o r o u s a c c e s s

t o c r e d i t l e d t o t h e e s t ab l i shmen t of t h e A g r i c u l t u r a l

C r e d i t Guarantee Scheme Fund (ACGSF) i n 1977. Although

o t h e r schemes e x i s t , t h i s i s t h e mos t ly wide ly sp r ead

w i t h i n t h e coun t ry t i l l d .a te . A g r i c u l t u r a l C r e d i t

Guarantee Scheme Fund (ACGSF) was proposed t o t h e Fede ra l

Government by t h e C e n t r a l Bank of Y i g e r i a (CBN) i n 1977 Y:; .

b u t t h e seheme came i n t o o p e r a t i o n on 3 rd A p r i l , 1978. . . 3

Through "The A g r i c u l t u r a l C r e d i t Guarantee Act No. 20

of March, 1977" t h e sum of W l O O m i l l i o n , subsc r i bed by

t h e Fede ra l Government t o t h e t u n e of 60% and t h e C e n t r a l

Bank 40% was p rov ided by t h e government t o boos t a g r i c u l t u r e

(CBY, 1994) . The Fede ra l Government e s t a b l i s h e d t h e Scheme

t o mp t iva t e commercial and merchant banks t o i n c r e a s e c r e d i t s

a l l o c a t e d t o a g r i c u l t u r e . Th i s was a s a r e s u l t o f r e l u c t a n c y

o f t h e l end ing banks t o ex tend c r e d i t s t o t h e a g r i c u l t u r a l

s e c t o r because o f t h e h igh r i s k s invo lved (Okor ie ; 1985) .

The scheme i s be ing managed by CEN w i t h a Board

o f D i r e c t o r s r e s p o n s i b l e f o r making p o l i c i e s . The scheme

gua ran t ee s bank l o a n t o a g r i c u l t u r a l s e c t o r up t o 75%

of t h e aihount i f d e f a u l t and t h e n e t o f t h e amount r e a l i s e d

by t h e bank from t h e d i s p o s a l o f c o l l a t e r a l s e c u r i t y p a r t i -

c u l a r l y f o r l a r g e l o a n s . Eut f o r sma l l l o a n s below

F10,000, t h e r e i s u s u a l l y a wa iver o f c o l l a t e r a l s e c u r i t y .

The scheme g r a n t s l o a n a t a market i n t e r e s t r a t e f o l l owing

d e r e g u l a t i o n o f i n t e r e s t r a t e i n August 1987. The scheme

a d m i n i s t e r e s l oan t o c a t e g o r i e s o f b o r r o w e r . ' I n d i v i d u a l

f a rmers a r e g iven a maximum of W100,OOO wh i l e c o o p e r a t i v e

s o c i e t i e s and c o r p o r a t e bod i e s a r e admin i s t e r ed a maximum

of .0 mi,l:lion. ?.. t !, . - c

Problem Sta tement :.

The r e l a t i v e l y sma l l s i z e s o f smal l -ho lder farms

r e s t r i c t t h e f a rmer s t o s u b s i s t e n c e p roduc t i on w i t h l i t t l e

o r n o t h i n g s o l d fo r ,money income. The sma l l q u a n t i t y o f

p roduc t s o l d , i n v a r i a b l y a t t r a c t low income because o f t h e

d i s p a r i t y i n t h e p r i c e s of a g r i c u l t u r a l and n o n - a g r i c u l t u r a l

produce (Odigbo; 1996 ) . T h i s t h e r e f o r e a f f e c t e d t h e

revenue base of t h e f a r m e r s , and o t h e r problems gene ra t ed

by t h i s d i , s t o r t i o n can be r e l a t e d t o t h e f a c t t h a t many

f a rmer s a r e d i scouraged by t h e low p roduc t i on .

Yost of t h e fa rmers have low l e v e l s o f e d u c a t i o n a l

a t t a inmen t and t h e i r non-farm a c t i v i t i e s such a s labour

h i r i n g , hun t ing and o t h e r menial b l u e c o l l a r jobs a t t r a c t

cheap mon'etary compensation. Most of them a r e n o t s k i l l e d

i n any f i e l d , t h e r e f o r e most o f f - s ea son jobs may n o t even

a t t r a c t income e s p e c i a l l y now t h a t t h e l abour market i s

g l u t t e d in Niger ia ( B a l l a r a ; : 1992) . Th is has r e s u l t e d

t o a more ha r sh economic s i t u a t i o n i n t h e s o c i e t y .

Worse s t i l l , t h e socio-economic s t a t u s i n t h e r u r a l

a r e a s r e q u i r e t h a t l a r g e fami ly s i z e s be kep t a s h e l p i n g

hands i n t h e farms. It i s even specu la t ed t h a t some

t r a d i t i o n s t r e a s u r e l a r g e f a m i l i e s a s a form of wea l th .

An i n s t a n c e can be drawn from Abaka l ik i where t h e s e n l a r g e '\!I. .

fami ly s i z e s consume s i g n i f i c a n t percen tages of b o t 6 farm

and non-farm incomes of fa rmers making them unable t o save

i n o rde r t o f i nance both farm and non-farm a c t i v i t i e s .

Farmers a r e aware of t h e i r poor f i n a n c i a l s t a t u s and

they make d e l i b e r a t e . e f f o r t t o s o l v e t h i s problem by

forming c o n t r i b u t i o n c lubs such a s "Isusu" and "Oku".

ow ever, because i t i s s t i l l t h e same poor fa rmers t h a t

make up t h i s group, t h e f i n a n c i a l l eve rage they o f f e r

f a l l s h o r t of t h e requ i rements of most fa rmers ( I j e r e ,

1981). Most often farmers resort to pressure groups such

as family meetings, age groups, church organisations and

special social clubs but usually the credit obtained

is also inadequate. Because of this most farmers turn

to professional and exploitative money lenders who give

them cut-throat and stringent conditions. This makes the

avenue unattractive for financing farm operations.

The financial inst-itutions such as banks and housing

organisations are often out of reach as a source of finan-

cing because of two main,reasons. One is that means of

securing loans here are too cumbersome with lots of docu-

mentation beyond the capability of small-holders. Two, Y,, .

generally -"agr iculture has low priority rating by the:b&ks . . :>

(Chidebelu; 1983). This is due to insignificant quota of

loan administered to farmers when compared with other

sectors, also default on the part of farmers has made the

finacial institutions to be more conservative in extending

loan to farmers.

To ameliorate the situation, government introduced

ACGSF in '1977. It is being designed to offer farmers soft,

sure and consistent lines of credit. This scheme has been

in existence for over 20 years. Also government devised

other means of helping farmers poor financial position by

introducing conmunity banks in 1992 by the then Head of

State, General Ibrahim Babangida. Even though government

agencies like CBN have evaluated the performance of ACGSF

and awarded high marks to its achievements, more than 85%

of the small-holder farmers are still threatened by.1ack

of finance for their activities (Maduabuchi, 1990). The

need therefore arises for us to know to what extent the

existence of A C G S F has helped to promote the economic

performance and of agriculture in Enugu State.

1.3 Objectives of the Study - 7 . . .,..

The broad objective of this study is to assess -the :r

performance of A C G S F in Enugu State from 1992 to 1996. The

specific objectives include to:

(i) determine the number and value of loan by

category of borrowers and purpose;

(ii) determine the repayment rate and 'the factors

that affect loan repayment;

(iii) identify the problems encountered by farmers

in borrowing;

9

(iv) identify the problems lending banks encounter

in loan disbursement

(v) determine the impact

usage of farm input,

and recovery;

of loan acquisition on

and on the level of farm out-

(vi) make recommendation based on the above findings.

1.4 Research Hypothese-s

Rased on the specific objective, the null hypotheses

to be tested include:

(i) Loan acquired does not affect input usage;

(ii) Loan acquired does not affect the level of

farm output.

1.5 Justification of the Studx

Basically, limited access to credit has been identified

and recognised as one of the major obstacles facing small

holder farmers. And the set-back makes this study very

relevant since the small holder farmers constitute more

of the farmers in agricultural production.

The farmers in the study area are mainly small scale

farmers with low capital base, hence information from

this study will be used for effective planning of credit

programmes and also assess the impact of credit on perfor-

mance of agriculture in the state.

. This study will be of relevance to lending agencies

since it is going to point out the reasons for default

among beneficiaries. This will enable them formulate

better strategies for loan recovery.

More importantly, this study will help policy makers

realign strategies, goals, objectives and operations for ... improved performance of the scheme in general.

Finally, the research will contribute to available

literature in the field of credit administration and

assessment, particularly in the area of study.

1.6 J,imitations of the Study

The result of this research should be interpretated

with the following limitations in mind. -a . '\'I. , . r

~ a t a collection took place among farmers who ,:;

were reluctant to give accurate values of their incomes,

investment and loaned amount.

Most of the respondents do not keep farm records.

Some also demanded remunerations before they will respond

to questions. Some data needed from the banks were not

given.because of the banks ethics of not divulging certain

information about their customers. Also, corporate bodies

refused to disclose information for security reasons. Thi.!

made it impossible to work with some data from corporate

bodies since the answers were incomplete.

The co-operative societies were not organised and

most of the data sought from them were not given because

there were no records.

Inspite of these limj-tations, the results of the

study would satisfy the objectives of the study and will

even help stimulate further research on the subject matter.

1.7 Qlan of the Stu.Q

This study is presented in five chapters. Chapter

One presents the background information, problem statement,

objectives of the study, Hypotheses, Justification of the

study and .. limitations of the study. -.. . '\.> . - C

The second chapter reviews relevant literatures;

with respect to: meaning and origin of agricultural

credit in Nigeria, types and sources of finance for farmers,

role of credit in agricultural development, problems and

prospects of agricultgral credit in Nigeria and Agricultural

Credit Guarantee Scheme Fund Delivery System.

- Chapter Three deals with the Methodology adopted

for the research work. It shows how the study area and

respondents were selected, data collection and analysis.

The fourth chapter presents the analysis of results

while chapter five presents summary, conclusion and

recommendations based on the research findings.

CHAPTER TWO

LITEFATURE REVIEW

2 . 0 Preamble,

The r o l e of c r e d i t i n developing a g r i c u l t u r e has

a t t r a c t e d a l o t o f i n t e r - d i s c i p l i n a r y s c h o l a r s . The need

f o r c r e d i t ,stems from t h e f a c t t h a t people who own t h e land

farmers do n o t always have t h e necessary c a p i t a l r e q u i r e d

f o r t h e i r a c t i v i t i e s . They may inc lude beg inners o r age ing

p e a s a n t s . The major r e s o u r c e s they have i s labour i nc lud ing

management and working exper ience i n farming. I n t hks view . z-

t h e n e c e s s i t y t o a c q u i r e o t h e r r e sou rces r e q u i r e bo&owing

o r r e n t i n g .

In t h i s s tudy , r e l a t e d l i t e r a t u r e s a r e reviewed under

t h e fol lowing sub-headings, meaning and o r i g i n of a g r i c u l -

t u r a l c r e d i t i n ~ i ~ e r i a , types and s o u r c e s . o f f i n a n c e f o r

fa rmers , r o l e of c r e d i t i n a g r i c u l t u r a l development, problems

and p rospec t s of a g r i c u l t u r a l c r e d i t i n Niger ia and Agr icu l -

t u r a l Cred i t Guarantee Scheme Fund d e l i v e r y system v i a ,

o r i g i n of .ACGSF, o b j e c t i v e s , s t r u c t u r e and o p e r a t i o n , proce-

dure, monitoring system and amendments of ACGSF.

2.1' Jleaning and Origin of Agricultural Credit in Nigeria - It*is an established fact that agricultural credit

in Nigeria is a powerful and effective tool in the develop-

ment of agriculture. Through credit, capital needs for

improved agricultural practices are made available and

this in turn facilitates increasing yield (FAO; 1983).

Credit could be defined as the capacity to borrow

and the amount borrowed constitutes the loan. Chidebelu

(1983) opined that the word loan and credit are used inter-

changeably in finance literature. In other words Agricultural

Credit could be defined as where some amount of money is 3.; .

invested .into agricultural venture to yield an expeGed re-

turns in the future. This will not only increase invest-

ment but will enhance profit and ensure loan repayment.

Quin (1974) defined agricultural credit as that which

encompasses all loans and advances granted to borrowers

whether beneficiaries of agricultural reforms or some other

programmes to finance and service production activities

relating to agriculture, fisheries, forestry and also for

.the processing, marketing, storage and distribution of

products resulting from all these activities.

' Although farmers source their credits from non-

1 1 . institutconal sources viz: relations, friends, isusu";

the evolution of agricultural credit in Nigeria (insti-

tutional sources) came to lime light with the involvement

of government in agricultural credit. This can be traced

back to the 1930s when loan was given for the purpose of

mixed farming in the former Northern Nigeria (Oluwasanmi

and Alao; 1964). Osuntogun (1973), noted that later bet-

ween 1946 and 1949 the Nigeria Local Development Board

which operated within 1955 and 1965 was established. Also

in the Western Nigeria, finance corporation became .opera- :&; .

tional within the same period. This was later succeeded :*

by the Western Agricultural Credit Corporation. While

the former Eastern Region established Fund for Agricultural

and Industrial Development (FAID). In 1975, the Nigeria

Agricultural and credit Bank (NACB) was established to

lend to the states credit institutions at 5-6% interest.

Thkse ,institutions in turn were expected to lend to farmers

at a slightly higher rate of interest (Duckham and John,

1980); In recent t imes, most s t a t e governments have been

involved i n t h e formulation of p-ogrammes t h a t w i l l provide

c r e d i t fa farmers. Such programmes include School t o l and ,

.Supervised Agr icu l tu ra l Credi t Scheme (SACS), National

Direc tora te of Employment farm se t t l ement s ,

t s a r e repaid i n cash o r i n kind

f u t u r e da te (Okorji ; 1987).

I n t h e same v e i n , t h e Federal government came up

with t h e Agr icu l tu ra l Credit Guarantee Scheme Fund i n 1977

t o provide c r e d i t f o r a g r i c u l t u r a l a c t i v i t i e s ,

2 . 2 D ~ e s And Sources of Finance f o r Farmers

Abe -(1981) noted t h a t t h e r e a r e two d i s t i n c t sbairces . F

of funds f o r farmers. These a r e the i n t e r n a l and eg te rna l

sources . I n t e r n a l funds a r i s e from n e t cash flow from farm

opera t ions , t h a t i s the d i f f e rence between cash r e c e i p t s

from farm opera t ions and cash opera t ing expenses. While

e x t e r n a l funds a r e o f t e n from n e t flow of loan funds, n e t

s a l e of r e a l and equ i ty introduced by new p r o p r i e t o r s . He

f u r t h e r pointed o u t t h a t whether the farmer i s an ind iv idua l ,

co-operat ive, corpora te body o r even hobby ( s u i t case) f a m e r ,

t h e type of f inance requi red a r e conditioned by c e r t a i n

f a c t o r s ; these f a c t o r s inc lude:

(a) identification of accessibility to an appropriate

financier;

(b) availability of loanable funds from identified

sources ;

(c) satisfaction by borrowing farmers of the lenders

criteria which are rooted by sound principles;

(d) accommodation of such credits with the law of

the land and in accordance with the economic,

political, monetary, fiscal and social policies

of the government.

Miller (1977), identified farmers credit as derived

from two main sources viz institutional and non-institutional f".. .

sources. -Nan institutional (informal) sources include' . . :..

relations, friends, village heads, merchants, money lenders

etc. This source tends to be largest in developing countries.

Credit under this category is granted without all the burden

of administrative formalities inherent in formal or institu-

tional credit. A greater percentage of the farmers depend

on the informal credit as the source of agricultural financing.

Meyer (1990), agreed with the above statement when he noted

that the total number of members of informal credit groups

in Migeria.is estimated at 20 million whereas the formal

credi,t groups are in the neighbourhood of 17,000 of

registered co-operative with 1.7 million members.

The institutional sources has been criticised for

its impersonal character and all that results from it.

~nstitutional sources may be types, giving rise to a

further dichotomy into private and public sources. Under

private institutional sources we have commercial banks,

merchant banks, insurance companies etc. While the

public institutional sources may include Agricultural

credit investment corporation, Ministries of Agriculture,

credit schemes by governments, Development Banks, Nigeria

Agricultural and Co-operative Bank (NACB).

The absence of sufficient impact by some private in-

stitutionhl sources led to the government initiatinz'a . .

number of credit programmes. Hence the rationale fgr

establishment of Agricultural Credit Guarantee Scheme Fund

(ACGSF) . Whereas the need for large scale farmers are mostly

met by institutional'sources, small scale farmers are

assisted by non-institutional sources (Chukwu, 1988).

This has been attributed to the fact that small scale

farmers cannot afford to provide collateral securities

as t h e i r coun te rpa r t s , t h a t i s t h e l a r g e s c a l e farmers.

Mi l l e r (1977), remarked t h a t i n Kwara S t a t e about 58%

of ' ava i l ab le c r e d i t were suppl ied by f r i e n d s and r e l a t i v e s ,

.24% by money lenders and only 3% came from i n s t i t u t i o n a l

sources . S imi la r ly , Osuntogun (1975), maintained t h a t

32% of the needs of small farmers i n two v i l l a g e s i n the

Western S t a t e s came from f r i e n d s and r e l a t i o n s while 13%

came from money l enders . Oluwasanmi and Alao (1964),

i d e n t i f i e d 2 2 banks which were loca ted i n predominantly

farming community and yet none of them gave loan farmer

2 .3 Role of Credi t i n Agr icu l tu ra l Development

E f f i c i e n t and e f f e c t i v e sources of c r e d i t propel

more rap id adoption of new technology by farmers, t&4$ i n . P

t u r n boost a g r i c u l t u r a l a c t i v i t i e s . . . :.

Murshid and Rahman ( l g g l ) , indica ted t h a t a g r i c u l t u r a l

growth occurs through c a p i t a l accumulation and t e c h n i c a l

changes. Most of t h e high y ie ld ing technology has been

a veh ic le of growth *in a g r i c u l t u r e s ince l a t e 1960s, t h i s

has g ross ly increased t h e c a p i t a l input and t o t a l output

of a g r i c u l t u r a l production. Mundlak (1988), pointed out

t h a t c a p i t a l accumulation leads t o the employment of c a p i t a l

in t ens ive techniques which switches t o modern technology,

t h a t i s c r e d i t f a c i l i t a t e s technology adoption.

Galbraith (1952), recognised the vital role of credit

which he described as a catalyst in stepping up agricultural

production. He added that at a certain state of agricul-

tural development credit became a strong force to further

development, that is when man with his managerial ability

lacks resources for efficient production, credit becomes

an antidote to the improvement. Hazari (1976), acknowledgd

that the role of credit in developing agriculture should be

to enable the farmer to move on to a level of technology

that would create a sustained basis for improving the

following agricultural input, output, man-days and other

indicators of development in terms of land and human

beings as well. Hence credit facilities creates accqss .\':;

to t?le ac<uisition and accumulation of capital whichi:leads

to future production.

The importance of finance as the very core of success

in agriculture cannot be overemphasized. Agriculture needs

financing right for time of investment to marketing stage.. -

~elsha-u (1959), agreed with the above statement when he

noted that farmers need credit for such things as the purchase

of planting materials, improved breeds, fence, water tanks

and other inputs, building, hiring of labour, processing

and marketing:

Credit has been said to propel the transition from

traditional agriculture towards modernisation and comrner-

cialisation state. Osuntogun (1973), recognised this when

.he stated that changes in traditional technique applied

in the traditional modern transformation process will

call for considerable investment of capital that is, in-

crease in the demand for credit. With such transformation

and improvement the farmers aspires for a better housing,

nutrition, 'health, education for the farm family (Nweke;

1986). The proceed from the sales of agricultural

cormnodities produced in excess of the family need is used

to improve the standard of living.

Farmers.use credit obtained not only for farm work ti'; .

but for feeding the farm family. Osuntogun (1975),:? :. remarked that food and labour gulp majority of the credit

available to small-holder farmers. Ihimodu (1986)) upheld

similar view by reporting that 80% of the cash expenditure

on the farm is baing expended for labour input. This he

attrtbuted to sharp rise in labour cost as'a result of

salary review and migration from.rura1 to urban areas in

search of white collar job. Although agricultural credit

is supposed to be used primarily by farmers for agricultural

activities., sometimes farmers divert it to non-farm activi-

ties negating the purpose for which it was meant (Arene, 1990)

Most t imes i t i s used f o r paying f e e s f o r t h e i r c h i l d r e n ,

feed ing t h e i r household o r even t a k i n g t i t l e s . I n supply-

i n g c r e d i t f o r a g r i c u l t u r a l a c t i v i t i e s , it i s d i f f i c u l t

t o make d e l i m i t a t i o n s of t h e e x t e n t t o which c r e d i t i s t o

pu t t o use a s r ega rds product ion and consumption r e s p e c t i v e l y .

Vigour (1958), i n d i c a t e d t h a t only 50% of money borrowed i s

used f o r a g r i c u l t u r a l a c t i v i t i e s whi le t h e r e s t i s being

d i v e r t e d t o food, c l o t h i n g , r e l i g i o n and o t h e r s o c i a l

o b l i g a t i o n s .

2 . 4 .Problems and Prospec ts of A g r i c u l t u r a l Cred i t i n

!Tiger i a .

Having i d e n t i f i e d t h e main sources o f fund a v a i l a b l e

t o Niger ia fa rmers , one would say t h a t f i nance i s no .(. . longer .\!r. .

a problein t o farmers bu t t h e t r u t h i s t h a t t h e majd; ... problem

f a c i n g farmers i s l a c k of f i n a n c e . The l e v e l o f farming

i n many p a r t of t h e count ry has ha rd ly gone beyond t h e

s u b s i s t e n c e l e v e l , hence t h e f i n a n c i a l r e sou rces r e q u i r e d

t o engage i n a commercial farming may n o t be

a p p r e c i a t e d .

Araujo (1967), noted t h a t an e n t r y i n t o commercial

farming f o r an i n d i v i d u a l wi thout farming a s s i s t a n c e o r

suppor t from o t h e r sources i s a d i f f i c u l t t a s k . There i s

'a lso a problem of compet i t ion which a new e n t r a n t w i l l

encounter from existing farm operators wishing to expand

activities. The new entrant or small farmer would be up

in arms grappling with financial problems for diversion of

loans for other uses that is non-agricultural acdivities.

Abe (1981)) observed that farmers use credit for purposes

other for wh.zf it is granted. There is the temptation to

utilize the credit outside any planned programme with the

result that farmers may push themselves into over expansion,

over trading, extravagant living or other fraudulent or

highly speculative venture.

Illiteracy to a great extent is a major stumbling block

for easy flow of fund to agricultural sector. Ojo (1976))

identified the endermic problem with most of the peasant

farmers ds lack of knowledge of even the sources of?hredit . ,. . .

or terms of loan as due to low literacy level amoni'the

preponderance of the full time farmers, and also due to

inadequate communication facilities in the country.

Most farmers inspite of their farming experience

still do not break &en or have bumper harvest because

of inadequate use of capital. Sule (1986)) maintained

that the problem of low productivity and lack of improve-

ment in agriculture is due any or a combination of factors

among which is credit unavailability as the most limiting

factor of all other constraints. Ogunfowara (1972),

remarked that low rate of adoption of innovation in

,agriculture is attributed to inadequate financial re-

sources. He further observed that the timing of sales

of farmers products is mostly determined by emergencies dic-

tated by farmers need for money. He added that access to

finance would increase the rate of adoption of innovation

in agriculture as well as determine when to dispose of

farm product to take advantage of the market situation.

Osuntogun (1973), identified a common weakness of

public credit institutions in West Africa as excessive

red-tapism and complexities involved in processing loan

applicaticon. Osuntogun and Oludima (1981), attributed . * the high cost to the nature of administering small-holder

credit scheme which involved a lot of supervision. Nto

(1981), observed that most farmers encounter difficulty

in complying with banks demand for feasibility report

before loan will be'administered.

Most banks are reluctant to give loan to farmers' since

there are no guarantee for repayment of the loan. Ojo (197i';

in his study revealed that 40% of group of banks reported

that they.were unwilling to assist because agriculture is

unproductive. In the same vein, Okorie (1986), opined that

banks are generally unwilling to give loans to agricultural

sector because the sector is characterised by a lot of

risk, arising from uncertain farm product market and

.poor management practices by farmers.

Belshaw (1959), maintained that since rural credit

markets are notoriously imperfect, access to credit is

limited for farmers, particularly small-holder, without

government intervention a high price of capital will

prevail; further screening out the small-holder farmers

from credit market. He further added that because of

distorted exchange rate, food price control, import of

cheap food and inefficient markets, farmers receive low

prices for the product hampering their borrowing ability.

~overnment intervention by bringing in credit 5; . .- subsidies discouraged banks in loan administrations

Gonzalez-vega (1977), emphasized the imposition of

government interest rate restriction (credit subsidies)

which has induced banks to ration credit in a manner that

exclude the small-holder farmers from formal credit market.

This he called "the iron law of interest rate restriction".

He further remarked that rather than bridging income in-

equality, low interest rate in credit programme increases

it; by way of the banks concentrating on large scale

farmers instead of the majority that is the small scale

farmers .

Collateral securities has been negating farmers access

to credit. Anthonio (1964), observed that small scale

farmers have nothing worth while to offer as security for

loans. 'This has adversely affected their acquisition of

loan from the banks. However, the small scale farmers are

confronted with credit problem both from institutional and

non-institutional sources. From non-institutional sources,

they usual1,y have very scarce and unreliable supply and

also very expensive credit while the problem of institutional

sources is'reluctancy of the commercial banks and other

financial institutions as a result of need to present colla-

teral security. Hence, financial institutions have adopted

rigid procedures for processing loans resulting to &due . delays in approval: and disbursement of loan (Agwagomi, 1987),

Nwagbo and Famoriyo, 1981). Miller (1979), confirmed it

when he reliably noted that money lenders charged about

90% or above as interest rate, although this is attributed

to chronic indebtedness of the small scale ,farmers.

Baum (1966), observed that agricultural credit

institutions in Nigeria in the 1960s were trial and

error and failures as far as extending credit to agricul-

' tural sectors were concerned. Famoriyo (1980), revealed

the rriajor problems confronting the formal credit institutions

as inadequacy of funds, lack of co-ordination, lack of

identification with farmers problem, inadequate executive

.power of the officials and locational distribution of the

institutions. Idachaba (1983), upheld the above view when

he noted that part from under funding syndrome of the

lending banks, there are problems of inappropriate, un-

realistic or unworkable policies.

As a result of service cost and risk involved,

lending banks are reluctant to invest in agriculture.

This reflects in their not hiring enough qualified staff

to handle agricultural loans and as such projects are not

adequately monitored. It is also obvious that the major - .?.

weakness -of agricultural credit banks are high cost=.of I?

loan transaction, monitoring and superuision, low recovery

rates, poor career prospects for the programme staff and

in some cases bureaucratic delays in loan processing and

failure to treat groups as borrowing entities. Also

the incentives to facilitate loan reovery are not usually

there. The agricultural credit staff complain of lack of

facilities such as vehicles for effective monitoring and

supervision, this often results to loan deSault (CBN 1994).

Loans have been extended not only t o where c r e d i t was

n o t r e a l l y key c o n s t r a i n t , but a l s o t o where borrowers

were not r e a l l y farmers but have access t o i t . This has

led t o a high d e f a u l t r a t e as regards loan repayment.

Okorie ( l985) , ind ica ted t h a t t h e four major determinants

of loan repayment were i d e n t i f i e d as the na tu re of d i s -

bursement, t h e time of loan de l ive ry , t h e number of

supervisory v i s i t s and the p r o f i t a b i l i t y of the e n t e r p r i s e s .

Poor pol icy dec is ions by t h e management of t h e banks

t o a g r e a t ex tent adversely a f f e c t the e f f i c i e n c y of a g r i -

c u l t u r a l banks. Bel loncle (1985) a s soc ia ted t h e f a i l u r e

of a g r i c u l t u r a l banks i n the 1980s t o the poor dec is ions 1%. . i .,

of bank management. Anderson (1990), agreed with t c e above 3

view when he pointed out t h a t the g rea t increase i n i n t e r e s t

r a t e s on r u r a l c r e d i t i n t h e 1980s s i g n i f i c a n t l y reduced

farmers incent ives t o employ workers on a year round b a s i s

and in f a c t expla ins t h e r e l a t i v e dec l ine i n permanent em-

ployment during t h i s per iod . While Meyer (1990), revealed

t h a t low i n t e r e s t r a t e l ead t o excess demand and non-price

r a t i o n i n g . This gives powerful farmers a reason t o use t h e i r

inf luence to. ge t a l a r g e r sha re of t h e cake. He f u r t h e r

added t h a t i t a l s o gives r e n t seeking-loan o f f i c e r s an

o p p o r t u n i t y t o e x t r a c t b r i b e s , t h e r e b y encouraging

borrowers who "buy" l oans t o s e e l i t t l e r e a son t o r epay

them.

Although f a rmer s a r e r e l u c t a n t t o pay back t h e i r

l o a n s , most t i m e s env i ronmenta l f a c t o r s n e g a t e t h e i r

a b i l i t y t o pay. Krause e t - a 1 (1990), observed t h a t i n

c r e d i t programs t h e p r i n c i p a l d i f f i c u l t y w i th s u b s i d i z e d

i n t e r e s t r a t e i s t h a t t h e t a r g e t e d f a rmer s have l i m i t e d

means t o i n s u r e a g a i n s t c rop f a i l u r e . Also N ige r i an

fa rmers have n o t been p r o t e c t e d enough a g a i n s t t h e

e f f e c t s o f n a t u r a l h a z a r d s , r i s k s and u n c e r t a i n t i e s

which a r e among t h e r ea sons f o r banks ' r e l u c t a n c y i n

a d m i n i s t e r i n g l o a n s t o f a rmer s (FGN 1987) . 5-

Igben (1972, i n d i c a t e d t h a t p o l i t i c i a n s have a d v i s e d

government i n s t i t u t i o n s t o i n t r o d u c e some c r e d i t programmes.

Th i s t h e y ( p o l i t i c c a n s ) u s e as a compensat ion t o t h o s e

t h a t vo t ed them i n , t he r eby making f a rmer s see c r e d i t as

a g i f t which do n o t need t o be r e p a i d .

Ihimodu (1986) , opined t h a t i f c r e d i t s w e r e made

a v a i l a b l e , t h e r e t a r d e d a g r i c u l t u r a l s e c t o r would s t a r t

moving, c r e d i t w i l l now s t i m u l a t e t h e growth o f a g r i c u l t u r e

by t h e i r c o n t r i b u t i o n t o t h e mode rn i s a t i on o f t h e s e c t o r ,

t h a t i s p r o v i s i o n o f equipment l i k e t r a c t o r s , p loughs

and o t h e r machinery which w i l l r e p l a c e hoes , c u t l a s s e s

. a n d improved s e e d s , f e r t i l i z e r s and o t h e r chemica l s . ,

C r e d i t w i l l a l s o f a c i l i t a t e t h e employment o f a g r i c u l -

t u r a l s t a f f and e x t e n s i o n workers , expand c u l t i v a t e d

a r e a s and develop a g r i c u l t u r e i n g e n e r a l .

2 . 5 AGRICULTURAL CREDIT GUARANTEE SCHEME FUND DELIVERY SYSTEMS (ACGSF)

2 . 5 . 1 0 r i & of ACGSF

The scheme was proposed t o t h e Fede ra l Government

by t h e C e n t r a l Bank o f N ige r i a e a r l y i n 1977 b u t w a s

accepted-*in p r i n c i p l e . The pane l suppor ted t h e i de$ - r

and sugges ted i n i t s r e p o r t an e x t e n s i o n o f t h e schgme

t o cover n o t on ly a g r i c u l t u r a l bu t a l s o s m a l l s c a l e

e n t e r p r i s e s i n g e n e r a l . The Government r e j e c t e d t h e

e x t e n s i o n because such w i l l deny t h e gua ran t ee t o a g r i c u l -

t u r a l s e c t o r i n f avou r o f o t h e r s m a l l e r i n d u s t r i e s which

s e c u r e c r e d i t more t han a g r i c u l t u r e . D e t a i l s o f t h e

approved p roposa l were l a t e r embodied i n a n Act - "The ACGSr

Act No. 20 of March 1977". The scheme now came i n t o

o p e r a t i o n on 3 rd A p r i l 1978. The Act p rov ided fund o f

W l O O m i l l i o n subsc r i bed by t h e Fede ra l Government 60%

and Central Bank of Nigeria 40%. The fund was put under

the management of the Agr icu l tu ra l Credi t Guarantee

Scheme Fund Board but t h e Central Bank was appointed

the managing agent f o r the day t o day running of t h e scheme.

2 . 5 . 2 Objective of ACGSF

The Federal Government e s t ab l i shed t h e scheme t o

motivate t h e Commercial and Merchant Banks t o increase

c r e d i t a l loca ted t o a g r i c u l t u r e . The scheme was es t ab l i shed

t o ensure aga ins t losses ,which t h e lending banks encounter

and a l s o a s a r e s u l t of the r e luc tance of lending agencies

(banks) t o extend c r e d i t s t o a g r i c u l t u r a l s e c t o r because of

high r i s k s d11e t o n a t u r a l hazards, p e s t s and disease+.: _ r and long g e s t a t i o n per iod . The a g r i c u l t u r a l purposeri i n

r e spec t of which c r e d i t can be guaranteed by t h e scheme

include t h e fol lowing:

The establ ishment and management of p l a n t a t i o n

f o r the production of rubber , o i l palm, cocoa,

co f fee , t e a and o the r cash crops,

The c u l t i v a t i o n o r production of food crops

and g ra ins such as c e r e a l s , t u b e r s , vegetables

e t c .

(c) Animal husbandry comprising of pou l t ry , piggery,

c a t t l e r e a r i n g , f i s h farming e t c .

However, the establ ishment of t h e scheme was in r e a l i -

s a t i o n of r o l e of c r e d i t i n a g r i c u l t u r a l t ransformation

and development, and t h a t i t i s only t h e lending banks

c o n t r o l l i n g t h e bulk of the count ry ' s consol idated

f i n a n c i a l a s s e t s t h a t can provide the quantum of c r e d i t

needed t o transform a g r i c u l t u r e .

2.5.3 St ruc tu re and Operation of ACGST

The scheme i s under the management of ACGSF Board.

The board i s made up of s i x members with a chairman appoin-

Red by both t h e Federal Government and t h e Central ~ d h k of C C

Nigeria . While t h e Federal Government appoints four%embers

t o the board including t h e chairman who i s a member of t h e

Board of Di rec to r s , t h e s e c r e t a r y t o t h e Board i s a non

member. A f u r t h e r breakdown of t h e board 's composition .

shows t h a t the membership of the Government, o f f i c i a l s

including t h e chairman and four government o f f i c i a l r e -

presents the Federal Minis t ry of Finance and t h e Federal

Minis try of Agr icul ture and Natural Resources. While t h e

two non government o f f i c i a l s a r e t h e Direc tors of Agr icul tur ' : .

~ i n a n c e department and t h a t of domestic operat ions both

of Central Bank of Nigeria (ACGSF Annual Report, 1994).

The Board meets a t l e a s t four times a year . A t such

meetings, t h e chairman of t h e board p res ides i n t h e absence

of t h e chairman, any o the r member may p res ide . The quorum

of such meeting c o n s i s t s of a t l e a s t four members including

a t l e a s t one whom s h a l l be appointed by CBN. The Board

may br ing i n exper t i n t h e meeting a s an a d d i t i o n a l member.

The board has the s o l e duty of adminis ter ing and

supervis ing t h e fund. The Central Bank i s the managing

agent f o r the day t o day adminis t ra t ion of the scheme,

while the -Commercial and Merchant Banks a r e the lead& r .-

i n ~ t i t u t i ~ n s . The a g r i c u l t u r a l head of f i c e of t h e f ihance

department of t h e Central Bank co-ordinates t h e opera t ions

of t h e scheme and serves a s i t s s e c r e t a r i a t . Within t h e

Agr icu l tu ra l Finance Department, i s the d i v i s i o n of c r e d i t

guarantee and inspect lon whose funct ions inc lude:

(1) t o g ive guarantee t o banks on the b a s i s

of t h e i r a p p l i c a t i o n ;

( 2 ) t o inspect p r o j e c t s i n r e spec t of which

guarantee has been given and t o give advice

where necessary.

This

t o i n v e s t t h e s u r p l u s monies o f t h e fund ,

t o r epay t h e l end ing banks t h e amount due t o

them i n t h e d i s c h a r g e of t h e i r o b l i g a t i o n s

under t h e scheme and

t o perform such l e g a l funcg ions a s may b e

nece s sa ry i n s u i t s r e g a r d i n g gua ran t eed

l o a n s by o r a g a i n s t t h e fund.

d i v i s i o n i s under t h e s e c r e t a r y o f t h e board

o f d i r e c t o r s . D i r e c t l y under t h e c o n t r o l l e r a r e t h e

Sen io r A g r i c u l t u r a l C r e d i t Manager and f i n a l l y t h e

A g r i c u l t u r a l C r e d i t O f f i c e r s (ACOS). The ACOS are

d i r e c t l y r e s p o n s i b l e t o t h e A g r i c u l t u r a l C r e d i t Manager. .,\.:

They communicate d i r e c t l y w i t h t h e fa rmers i n t h e f f g l d . :-

2 . 5 . 4 Procedures o f ACGSF

The funds gua ran t eed does n o t o b v i a t e t h e need t o

p rov ide c o l l a t e r a l s e c u r i t y p a r t i c u l a r l y f o r l a r g e l o a n s

bu t f o r sma l l l o a n s ' less t h a n ~ 1 0 , 0 0 0 , t h e r e i s waiver

o f s e c u r i t y bu t t h e farmer ha s t o be i n t roduced by a

g u a r a n t o r . The scheme g r a n t s l oan a t a market i n t e r e s t .

gate fo l l owing d e r e g u l a t i o n o f i n t e r e s t r a t e i n August ,

1987 .

The s e c u r i t y which may be o f f e r e d t o a bank f o r

t h e purpose of any l o a n under t h e scheme i n c l u d e t h e

fo l l owing :

a charge on l and i n which t h e borrower h o l d s

e q u a l i n t e r e s t o r a r i g h t t o farm o r charge

on a s s e t s i n c l u d i n g f i x e d a s s e t s , c rops o r

l i v e s t o c k ;

a charge on a movable p r o p e r t y of t h e bor rower ;

a f l i f e a s s u r a n c e p o l i c y , a promissory n o t e

o r o t h e r n e g o t i a b l e s e c u r i t y .

s t o c k s and s h a r e s ;

p e r s o n a l gua ran t ee ; ,

any o t h e r s e c u r i t y a c c e p t a b l e t o t h e bank. 3;

a p p l i c a t i o n s f o r banks l o a n under t h e scheme a r e

made on a form p r e s c r i b e d f o r t h e purpose . Three c o p i e s

o f t h e a p p l i c a t i o n s a r e expec ted t o be forwarded t o t h e

bank from which a l o a n i s d e s i r e d . The bank i s expec ted

t o forward one copy o f t h e a p p l i c a t i o n t o t h e n e a r e s t o f f i c e

o f t h e c e n t r a l bank i n t h e s t a t e i n which t h e bank i s s i t u -

a t e d o r a s may be o the rw i se d i r e c t e d . The r e g u l a t i o n o f

t h e scheme s t a t e s t h a t a l l a p p l i c a t i o n shou ld b e p roce s sed

w i t h i n 60 days and i f r e j e c t e d shou ld b e g iven r e a s o n f o r

t h a t and t o l d s t e p s t o be t aken t o make t h e a p p l i c a t i o n

s u c c e s s f u l .

Monitor ing System of ACGSF

There i s always r e g u l a r v i s i t s of t h e A g r i c u l t u r a l

C r e d i t O f f i c e r of bo th CBR s t a f f and l end ing banks t o t h e

f a r m e r s , b e f o r e and a f t e r t h e l o a n ha s been a d m i n i s t e r e d .

In o r d e r t o s a f egua rd t h e l o a n s g r a n t e d from b e i n g

misused, t h e scheme came up w i t h s t r a t e g i e s . The scheme

' a r r a n g e s and p rov ide s f unds t o t h e pe rson who s u p p l i e s t h e

i n p u t such a s l i v e s t o c k , improved v a r i e t i e s e t c . i n s t e a d

o f paying t h e l oan d i r e c t l y t o t h e borrower . The s u p p l i e r

w i l l now f u r n i s h t h e bank w i t h a document i n ev idence o f

t h e d e l i v e r y . I. .\*;

It is-"an o f f e n c e under t h e scheme t o app ly f o r any 5r

l o a n f o r a purpose and d i v e r t i t t o o t h e r mot ive .

2 . 5 . 6 Amendments o f ACGSF

For i n d i v i d u a l f a rmers maximum amount of l o a n

a d m i n i s t e r e d was W50,000 and maximum f o r c o - o p e r a t i v e

s o c i e t i e s and c o r p o r a t e bod,ies was W 1 m i l l i o n .

Rowever, i n June 1988 t h e F e d e r a l Government amended

some p r o v i s i o n s o f t h e d e c r e e e s t a b l i s h i n g t h e scheme t o -

( a ) i n c r e a s e t h e maximum amount guaran teed t o

i n d i v i d u a l f a rmer s from W50,000 t o W100,OOO

w h i l e c o - o p e r a t i v e and c o r p o r a t e bod i e s remain

a t W 1 m i l l i o n r e s p e c t i v e l y .

(b ) widen t h e a g r i c u l t u r a l a c t i v i t i e s t o cover

beyond t h e p roduc t i on of c r o p s , animal

husbandry and f i s h farming t o i n c l u d e f i s h

c a p t u r e , s t o r a g e , farm machinery and h i r e

s e r v i c e and i n t e g r a t e d a g r i c u l t u r a l p roduc t s

i n c o r p o r a t i n g -p roduc t i on .

( c ) Amount f o r wa iver o f c o l l a t e r a l s e c u r i t y was

i n c r e a s e d from W5,000 t o #410,000. !. 6% - .- 59

CHAPTER THREE

METHODOLOGY

3 . 1 S t u d y Area

The s t u d y w a s c o n d u c t e d i n Enugu S t a t e now made u p o f

Enugu and p a r t o f Ebonyi S t a t e . Enugu s t a t e s h a r e s

b o u n d a r i e s ' w i t h Benue and Kogi S t a t e s t o t h e Nor th , t o t h e

E a s t w i t h C r o s s River , t o t h e W e s t Anambra and t o t h e S o u t h

Abia and I m o S t a t e .

The c h o i c e o f Enugu s t a t e i s b e c a u s e t h e i n h a b i t a n t s are

p r e d o m i n a n t l y f a r m e r s and a l s o f o r c o n v e n i e n c e o f d a t a +; - r

c o l l e c t i o n from ACGSF h e a d q u a r t e r s i n Enuqu. 3

r : < .

Enuqu S t a t e is made u p of n i n e t e e n ( 1 9 ) L o c a l Government

A r e a s , w i t h t h r e e a g r i c u l t u r a l zones . These zones i n c l u d e :

a ) A b a k a l i k i zone ' c o n s i s t i n g o f Ezza , A b a k a l i k i , Ikwo,

I s h i e l u , I z z i and Ohaukwu L o c a l Government A r e a s .

b ) - Nsukka zone: T h i s i s made up o f I g b o - E t i t i , Igbo-Eze '

Nor th , Iqbo-Eze S o u t h , I s i - u z o , Uzo-Uwani and Nsukka

Loca l Government Areas .

c ) Enugu zone c o n s i s t i n g o f Awgu, Enugu Nor th , Enuqu

s o u t h , O j i R i v e r , Ezeagu, Nkanu and Udi L o c a l

Government A r e a s .

Nsukka zone p r o d u c e s maize , r ice i n commercial quan-

t i t i e s . Yam, c a s s a v a , cocoyam, p i g e o n p e a and v e g e t a b l e s

a r e a l s o produced i n l a r q e q u a n t i t i e s . while Enuqu zone

p r o d u c e s , r i c e , bambara n u t , palm p r o d u c e , cashew n u t and

o t h e r tree c r o p s . A b a k a l i k i i s n o t e d f o r r ice , yam and

c a s s a v a i n l a r q e q u a n t i t y . L i v e s t o c k l i k e p o u l t r y , s h e e p ,

g o a t , p i q s a r e p roduced i n a l l t h e zones t hough a t a

s u b s i s t e n c e l e v e l .

3 . 2 Samplinq P l a n

A random sampl ing t e c h n i q u e was u s e d i n t h e s e l e c t i o n

o f r e s p o n d e n t f o r t h e s t u d y . A l i s t o f b e n e f i c i a r i e s w a s

drawn from CBN and f o r n o n - b e n e f i c i a r i e s , a l i s t w a s drawn

from ENADEP (Enugu S t a t e A g r i c u l t u r a l Development Programme)

From t h e s e l i s ts , 1 0 0 f a r m e r s w e r e s e l e c t e d f rom bene-

f i c i a r i e s and 100 from n o n - b e n e f i c i a r i e s b r i n g i n g t h e s ample

s i z e t o 200 f a r m e r s .

3 . 3 Data C o l l e c t i o n -

Da ta f o r t h e s t u d y was c o l l e c t e d from b o t h p r i m a r y

. and s e c o n d a r y s o u r c e s . A set o f q u e s t i o n n a i r e was u s e d

t o o b t a i n d a t a from t h e f a r m e r s t o d e t e r m i n e t h e mode o f

o p e r a t i o n o f t h e scheme which i n c l u d e s , number and s i z e

o f l o a n , p rob lems e n c o u n t e r e d by f a r m e r s i n bo r rowing etc .

Al so banks w e r e i n t e r v i e w e d t o find o u t p rob lems

e n c o u n t e r e d by t h e l e n d i n g banks and mode o f o p e r a t i o n too.

Seconda ry d a t a was o b t a i n e d t h r o u g h t h e r e v i e w o f

r e l e v a n t j o u r n a l s , t e x t s , p r o j e c t r e p o r t s , i n s t i t u t i o n a l

a n n u a l r e p o r t s , C .B .N c o n f e r e n c e p r o c e e d i n g s and o t h e r

r e l e v a n t m a t e r i a l s .

3 . 4 A n a l y s i s o f Da ta -.

o b j e c t i v e s i,ii,iii and i v w e r e a n a l y s e d u s i n g

d e s c r i p t i v e s t a t i s t i c s s u c h as means, p e r c e n t a g e s and

f r e q u e n c y t a b l e s . '

O b j e c t i v e v was a n a l y s e d w i t h s t u d e n t t - t e s t .

T h i s was n e c e s s a r y t o compare t h e i n p u t c o s t and l e v e l o f

o u t p u t o f b e n e f i c i a r i e s w i t h t h a t o f n o n - b e n e f i c i a r i e s .

The t-test f o r m u l a r i s g i v e n a s

t = xl: - x2

2 Where v a r i a n c e = Sp = ("i-1) S1 + 4 n 2 - 1 ) s 2 2

Mean v a l u e o f l o a n b e n e f i c i a r i e s

Mean v a l u e o f non b e n e f i c i a r i e s

S t a n d a r d d e v i a t i o n o f b e n e f i c i a r i e s

S t a n d a r d d e v i a t i o n of n o n - b e n e f i c i a r i e s

Sample s i z e o f b e n e f i c i a r i e s

Sample s i z e of n o n - b e n e f i c i a r i e s .

CHAPTER FOUR

RESULT AND D I S C U S S I O N S

4 . 1 SOCIO-ECONOMIC CJIZiRACTERISTICS O F RESPONDENTS

The socio-economic v a r i a b l e s c o n s i d e r e d i n c l u d e age

of r e s p o n d e n t s , household s i z e , e d u c a t i o n a l a t t a i n m e n t ,

' s e x , m a r i t a l s t a t u s , o c c u p a t i o n and annua l income o f

r e s p o n d e n t s .

4 . 1 . 1 . Age d i s t r i b u t i o n o f r e sponden t s ,

A g e i s one o f t h e f a c t o r s t h a t have s i g n i f i c & t ..*

i n f l u e n c e on a g r i c u l t u r a l p r o d u c t i v i t y . B e l l o n c l e (1985)

r e p o r t e d t h a t younger p e o p l e a r e more f l e x i b l e i n t h e i r

d e c i s i o n , s e r v e b e t t e r a s a g e n t o f i n n o v a t i v e t r a n s f e r

and a c h i e v e m o r e ' i n t h e i r a g r i c u l t u r a l a c t i v i t i e s . Older

f a r m e r s a c h i e v e less because t h e y a r e r i s k a v e r s e and

because o f t h e stress i n v o l v e d i n a g r i c u l t u r e .

T a b l e 4 . 1 Age d i s t r i b u t i o n o f r e s p o n d e n t s

-----.- _ - Aqe Range ( Y e a r s ) . No o f Responden t s P e r c e n t a g e s

6 1 and above 8 6

-__..-.-.-.-.------- -- - TOTAL 150 100

----. . - -- .- . .--. -.- _ _ _. - , .

Source : F i e l d s u r v e y , 1997.

From t a b l e 4 . 1 , it i s o b s e r v e d t h a t m a j o r i t y _ ? ( 4 1 % ) .-

o f t h e * r e s p o n d e n t s f e l l w i t h i n t h e a g e r a n g e o f 4r-50 w h i l e

o n l y t h r e e p e r c e n t of t h e r e s p o n d e n t s f e l l w i t h i n t h e a g e

r a n g e o f 21-30 y e a r s .

From t h e a h i l y s i s 62% o f t h e respondents were able-

b o d i e s f a r m e r s as t h e y f e l l be tween age b r a c k e t o f 21-50

y e a r s and hence c o u l d a c h i e v e more i n a g r i c u l t u r e .

4 .1 .2 Household s i z e o f r e s p o n d e n t s

Accord ing t o L i p s e y ( 1 9 8 6 ) , a h o u s e h o l d i n c l u d e a l l

t h e p e o p l e who l i v e u n d e r one r o o f and a r e s u b j e c t t o one

, .

p e r s o n who t a k e s t h e f i n a n c i a l d e c i s i o n s o r t h e f i n a n c i a l

d e c i s i o n s j o i n t l y made. T h e r e f o r e a household compr i ses

household head , w i f e o r wives , c h i l d r e n and o t h e r

depondents o r r e l a t i v e s .

Table 4 . 2 : S i z e d i s t r i b u t i o n o f r e sponden t household

- - - - . _ . . . , _ -

C l a s s i n t e r v a l

No. o f ' p e r s o n s NO o f r e s p o n d e n t s P e r c e n t a q e - - - - - - . . . . --- -..-- -

11 and above 42 28

M a j o r i t y of t h e r e s p o n d e n t s w e r e m a r r i e d and had

c h i l d r e n w i t h o t h e r dependen t s . Tab le 4.2 shows t h a t

abou t 49% o f t h e ' r e ~ ~ o n d e n t s had household s i z e which

ranqed between 6-10 number o f p e r s o n s , w h i l e 28% of t h c

r e s p o n d e n t s had household s i z e of 11 members and above.

However household w i t h s m a l l e r s i z e r a n g i n g from 1-5

members were 2 3 % .

The a n a l y s i s showed t h a t 7 7 % o f t h e r e s p o n d e n t s

had n o t l e s s t h a n f i v e members i n t h e i r household."

T h i s c o u l d imply t h a t f a r m e r s had more mouths t o f e e d as

w e l l a s enouqh h e l p i n g hands i n fa rm work. The t e n d e n c y

t o d i v e r t some o f t h e f u n d s meant for f a rm work f o r p a y i n g

s c h o o l fees and o t h e r f a m i l y commitments were t h e r e .

T h i s a g r e e d w i t h L e g e t i (1981) o b s e r v a t i o n t h a t i n

s u p p l y i n q c r e d i t f o r a g r i c u l t u r e i n d e v e l o p i n g c o u n t r i e s ,

i t is d i f f i c u l t t o make d e l i m i t a t i o n o f t h e e x t e n t t o

which c r e d i t s e r v e s p r o d u c t i o n and consumpt ion r e s p e c t i v e l y .

E d u c a t i o n a l a t t a i n m e n t o f r e s p o n d e n t g .

E d u c a t i o n i s a n a s s e t t o a g r i c u l t u r a l deve lopment .

Knowledge h a s p o s i t i v e i n f l u e n c e on a d o p t i o n o f i n n o v a t i v e ? \? ;

t e c h n d l o g y . Moreso, e d u c a t i o n w i l l e n a b l e f a rmer6 p l a n 5-

o n how t o u s e l o a n e f f i c i e n t l y and i n t e r p r e t l o a n terms.

E d u c a t i o n a l a t t a i n m e n t o f r e s p o n d e n t s was c a t e g o r i s e d

i n t o f o u r c l a s s i n t e r v a l s , z e r o , 1-6 y e a r s , 7-12 y e a r s and

13 and above .

Table 4 . 3 D i s t r i b u t i o n o f r e sponden t f a r m e r s a c c o r d i n g

t o l e v e l of e d u c a t i o n a l a t t a i n m e n t .

~ e v e l of e d u c a t i d n a l NO o f a t t a i n m e n t ( y e a r s ) Respondents P e r c e n t a g e

ze ro 16 11

T o t a l 150 100 ............................................................ Source: F i e l d su rvey , 1 9 9 7 .

Tab le 4 . 3 shows t h a t 50% o f t h e r e s p o n d e n t s . s p e n t :is;

betwegn 1-6 y e a r s i n fo rmal e d u c a t i o n w h i l e 33% %pent 3

7-12 y e a r s and o n l y s i x p e r c e n t of t h e r e s p o n d e n t s s p e n t

13 y e a r s and above. I t c o u l d imply t h a t t h e s i x p e r c e n t

w e r e mainly r e t i r e d c i v i l s e r v a n t s t h a t j j o i n e d farming

e n t e r p r

I n a l l , 89% o f t h e r e s p o n d e n t s had f o r m a l e d u c a t i o n

.while 11% had no fo rmal e d u c a t i o n . T h e r e f o r e , s i n c e

e d u c a t e d f a r m e r s a r e e a s i e r t o work w i t h , more f l e x i b l e

i n t h e i r d e c i s i o n and a d o p t i o n o f i n n o v a t i o n s , t h e r e c o u l d

be a ray o f hope f o r a g r i c u l t u r a l development i n f u t u r e .

The a n a l y s i s shows t h a t 9 1 % o f t h e r e s p o n d e n t s

w e r e males w h i l e o n l y n i n e p e r c e n t were female . T h i s

s i t u a t i o n c o u l d p o s s i b l y be a t t r i b u t e d t o t h e f a c t t h a t

women o f t e n do n o t have t h e c o l l a t e r a l r e q u i r e m e n t s f o r

l o a n s . On t h e o t h e r hand, t h e h i q h p e r c e n t a g e of male

and v e r y low p e r c e n t a g e o f f emales c o u l d be a s a r e s u l t

o f male dominance i n t h e t r a d i t i o n a l s o c i e t y which d o e s

n o t a l l o w women t o borrow w i t h o u t t h e i r h u s b a n d ' s

c o n s e n t .

4 . 1 . 5 - M a r i t a l S t a t u s of r e sponden tg .i?; . - 3

About 8 4 % o f t h e r e s p o n d e n t s were m a r r i e d , 11% s i n g l e d

and 5 0 % widowed. T h i s shows t h a t even though b o t h s i n g l e d

and mar r i ed were among t h e r e s p o n d e n t s , t h e mar r i ed were

mos t ly invo lved . i n farming.

T h i s may o b v i o u s l y be due t o t h e f a c t t h a t mar r i ed ones

had more r e s p o n s i b i l i t y i n t h e i r household . They a t t a c h

impor tance t o inves tment more t h a n t h e s i n g l e d o n e s due

t o t h e i r o b l i q a t i o n s and need f o r fund.

Most o f t h e r e s p o n d e n t s had farming a s t h e i r pr imary

o c c u p a t i o n b u t some had secondary o c c u p a t i o n s . Primary

o c c u p a t i o n h e r e is where t h e responden t spends a t l e a s t

two- th i rd of h i s working p e r i o d i n farming w h i l e t h e

secondary o c c u p a t i o n i s t h e p a r t - t i m e a c t i v i t i e s t h a t

p re -occup ies t h e f a r m e r s s l a c k p e r i o d .

Tab le 4 . 4 D i s t r i b u t i o n o f r e s p o n d e n t s accord ing t o

Secondary o c c u p a t i o n s .

Secondary o c c u p a t i o n No o f Respondents P e r c e n t a g e

Trad ing and b u s i n e s s

C i v i l ' s e r v i c e 33 " 2 2

O t h e r s 2 1 1 4

No secondary o c c u p a t i o n 39 26

TOTAL 150 100

- Source: F i e l d survey, 1997.

Table 4 . 4 shows t h a t abou t 38% o f t h e r e s p o n d e n t s

sourced e d u c a t i o n a l income from t r a d i n g and b u s i n e s s t o

supp lemen t t h e fund t h e y a l r e a d y h a d .

Nowever, 2 6 % o f t h e r e s p o n d e n t f a r m e r s h a d no s e c o n d a r y

o c c u p a t i o n w h i l e o n l y 1 4 % o f t h e r e s p o n d e n t s combined

o t h e r m e n i a l jobs s u c h as h u n t i n g , c a r p e n t r y e t c w i t h

f a r m i n g t o i n c r e a s e t h e i r income.

From t h e a n a l y s i s 74% o f t h e r e s p o n d e n t f a r m e r s

were engaged i n s e c o n d a r y o c c u p a t i o n .

T h i s c o u l d b e a t t r i b u t e d t o t h e s e a s o n a l i t y o f f a r m i n g

a c t i v i t i e s which made it p o s s i b l e f o r r e s p o n d e n t s t o occupy

l a b o u r , d u r i n g o f f - s eason .

4 .1 .7 Annual Income l e v e l o f r e s p o n d e n t s ,

:i?;

The u l t i m a t e g o a l o f e v e r y f a r m e r i s t o impcove h i s 3

p e r c a p i t a l income. Some o f t h e r e s p o n d e n t s f e l l w i t h i n

l o w income g r o u p , some medium and o t h e r s w i t h i n h i g h income

e a r n e r s . The d i f f e r e n t - i n c o m e g r o u p s a r e i n d i c a t e d i n

t a b l e 4 .5

Table 4.5 Income d i s t r i b u t i o n o f r e s p o n d e n t s

Income r a n g e No of ' P e r annum r e s p o n d e n t s P e r c e n t age

------------_--_---------------------________________________________________-----------------------

L e s s t h a n 15,000 50 33

More t h a n 46,000 9 6

T o t a l 1 5 0 1 0 0

Source: F i e l d s u r v e y , 1997 .

Table 4.5 shows t h a t abou t 5 0 % of t h e r e s p o n d e n t s

f e l l w i t h i n t h e income r a n g e of W15,000 - 3430,000 w h i l e mi?;

3 3 % o f - \ h e r e s p o n d e n t s f e l l w i t h i n income o f l e s s=* than P

W15,000 and o n l y s i x p e r c e n t f e l l w i t h i n incame range of

W46,000 and above.

With 8 3 % o f t h e r e s p o n d e n t s f a l l i n g w i t h i n income

r a n g e o f less t h a n W30.000 p e r annum, t h e f a c t s t i l l remain:

t h a t ' m a j o r i t y of t h e f a r m e r s were low8.income e a r n e r s .

T h i s c o u l d be a r e s u l t o f low p r o f i t marqin made by f a r m e r s ,

O p e r a t i o n of t h e ACGSF

4 . 2 . 1 T o t a l number and v a l u e o f l o a n Guaranteed Category

o f borrowers and purpose

The s i z e o f l o a n f a r m e r s r e c e i v e i s v e r y i m p o r t a n t

i n I a r m i n q b u s i n e s s . T a b l e 4 .6 shows t h e t o t a l number o f

l o a n g i v e n t o f a r m e r s , a n d t h e v a l u e o f l o a n g i v e n w i t h i n

t h e y e a r s of s t u d y .

T a b l e 4.6 T o t a l number and v a l u e o f l o a n g u a r a n t e e d t o

T o t a l 1999

S o u r c e : CBN, Enugu, 1997 .

From t a b l e 4 . 6 , it i s o b s e r v e d t h a t t h e number o f

loan a d m i n i s t e r e d t o f a r m e r s was 593 i n 1992 but d e c r e a s e

t o 4 9 0 i n 1993 , t h e n f o l l o w e d t h e downward t r e n d o v e r t h e

y e a r s . But i n 1996 t h e number o f l o a n a d m i n i s t e r e d t o

f a r m e r s ' i n c r e a s e t l f r o m t h a t o f t h e p r e v i o u s y e a r wh ich w a s

However, t h e value of loan administered t o farmers

had no t r end .

4 . 2 . 2 T,adn quaranteed by Cateqory of borrowers.

The scheme ca tegor ised the mode by which loan could

be disbursed t o farmers. The ca tegor ies include t h e

following: Indiv idual farmers, Co-operative s o c i e t i e s

and Corporate bodies.

Table 4 . 7 Frequency d i s t r i b u t i o n of number and value of

loan guaranteed by category of borrowers.

Both t h e number and ,amount o f l a o n g u a r a n t e e d t o

c a t e q o r y o f borrowers had no t r e n d . The t o t a l number o f

l-aon a d m i n i s t e r e d t o i n d i v i d u a l f a r m e r s was 1975, c o r p o r a t e

body 12 and c o - o p e r a t i v e s o c i e t y 12. While t h e v a l u e o f

l a o n a d m i n i s t e r e d t o i n d i v i d u a l f a r m e r s was W8.210,900

whereas c o r p o r a t e body had #4,349,400 and c o - o p e r a t i v e

t h e least w i t h a t o t a l o f W2,512,200.

T h i s i s .an i n d i c a t i o n t h a t i n d i v i d u a l f a r m e r s were favoured

most , fo l lowed by c o r p o r a t i v e body and c o o p e r a t i v e s o c i e t y

was t h e l e a s t f avoured i n v a l u e o f l o a n d i s b u r s e d . The

favouri.ng of t h e number o f l o a n a d m i n i s t e r e d t o i n d i v i d u a l

f a r m e r s and v a l u e of l o a n c o u l d be a r e s u l t of t h e . .i?;

o b j e c t h e s of t h e scheme which i s t o r e a c h o u t c d d i t t o 3

s m a l l s c a l e f a rmers . Whereas t h e obse rved g a p between

i n d i v i d u a l f a r m e r s and o t h e r c a t e g o r i e s c o u l d be due t o t h e

f a c t t h a t t h e o t h e r two needed l a r g e r v a l u e o f fund because

o f . . t h e i r compos i t ion o r make up.

4.2.3 S t r u c t u r e of l o a n g u a r a n t e e d by purpose

The major a g r i c u l t u r a l a c t i v i t i e s which t h e scheme

funds i n c l u d e s :

Food c r o p s , c a s h c r o p s and l i v e - s t o c k . The numbers o f l o a n

g r a n t e d f o r t h e purpose l i s t e d above a r e shown i n i . t a b l e 4 . 8

Table 4.8 Frequency d i s t r i b u t i o n o f number o f l o a n

Purpose No. o f l o a n Guaranteed

L.i.vestock - 1992 1993 1994 1995 l996 Total 8Sharc ........................................................... Poultry 50 3 0 2 0 25 20 145 6 2

Sheep & Goat 5 6 2 - - 13 6

Fisheries 2 0 10 4 - - 3 4 15

Sub Total 85 ' 5 4 3 2 38 24 233 12

Food Crops -

Tubers & Rmts 300 250 180 50 237 1117 64

Grand Total 593 490 336 276 304 1999 I... 100

Table 4 . 8 shows t h a t between 1992 t o 1996 t h e t o t a l

number o f l o a n a d m i n i s t e r e d t o food c r o p s was 1 7 3 8 ,

Eollowed by l i v e s t o c k w i t h 2 3 3 and t h e leas t favoured

was c a s h c r o p t h a t had o n l y 2 8 numbers of l o a n .

The dominant p o s i t i o n o f food c r o p s c o u l d be a

r e f l e c t i o n o f t h e F e d e r a l government d r i v e towards

s e l f - s u f f i c i e n c y i n food p r o d u c t i o n . I t c o u l d a l s o be

a t t r i b u t e d t o t h e farminq c u l t u r e of t h e f a r m e r s i n

t h e s t u d y a r e a , which i s c o n c e n t r a t i o n on food c r o p s

and p r i m a r i l y coot and tub .er c r o p s . Indeed t h e r o o t

and t u b e r s u b s e c t i o n c o n s t i t u t e d more t h a n 5 0 % o f t h e

. . t o t a J v a l u e o f g u a r a n t e e under food c r o p s . :i?;

. .- 3

On t h e average , t h e p e r c e n t a g e s h a r e o f t h e number

of l o a n d i s b u r s e d t o food c r o p s was 8 7 % , l i v e s t o c k 1 2 %

and c a s h c r o p s had o n l y one p e r c e n t . T h i s c o u l d a l s o be

a t t r i b u t e d t o .banks p r e f e r e n c e t o l e n d t o s e c t o r s where

g e s t a t i o n p e r i o d s a r e s h o r t e r which g i v e s room f o r

e a s i e r and q u i c k e r l o a n r e c o v e r y . Farminq p a t t e r n o f thi-

a r e a shows t h a t t h e f a r m e r s a r e n o t s o much i n t o c a s h

c r o p s and l i v e s t o c k .

Under l i v e s t o c k farming, p o u l t r y was most

f avoured w i t h 1 4 5 number of l o a n s .

%is could be a r e s u l t of t he farming prac t ice in the area. Livestock

experienced a downward trend i n t he laon adhinistered within t he years

generally except fo r the.collunmoE others which had no trend.

Under .Eood crops, grains showed downwmd.trend within the years while

tubers and roots had no trend. O i l palm under cash crop showed downward t reni

but other cash crops had no trend over the years.

Livestock 1992 1993 199 4 1995 1996 Total. . %Shr

Poultry 263.7 168.64 136..21 286.53 348.4 1203.. 48 -11

Sheep & Goat 26.37 33.73 13.62 - - 73.72 4

Fisheries 105.48 56.21 27.24 - - 188.93 .I

Others - 52.74 44.97 40.86 67.99 32.70 %239.26 I '

Food C r ~ s -- - -

Grains 1054.38 1011.82 817.25 1194.5 902.30 4980.25 j .

Tubbers &Roots 1582.10 1405.30 1225.87 2116.62 1808.30 8138.19 G 1

3 . n t a l . 2636.48 2417.12 2043.12 3311.12 2710.60 13118.44 :.7

Cash Cr= ----

Oil pa.lm 26.37 16.80 13.62 - 17.92 74.71 39

Others 15.82 16.86 13.62 108.96 17.92 173.18 2.3

Sub Tbtal 42.19 33.72 27.24 108.96 35.82---- 247.39---' 2

Source: CBN Enugu, 1997.

Table 4 . 9 shows t h e va lue of l oan guaranteed

i n Livestock, food crop and cash c rops w i t h i n

1992 t o 1996.

The Analysis shows t h a t i n l i v e s t o c k , t h e s h a r e

percentage, .of amount d i sbu r sed t o p o u l t r y was 71%

while t h e l e a s t was sheep and g o a t farming which

had fou r pe rcen t only .

Under food c rops , t u b e r s and r o o t s had 62Fi,;

and i s r a i n s had 3 8 % .

While under cash crops t h e amount d i sbu r sed t o

o t h e r cash crops had a sha re percen tage of

70% and o i l palm had 30%.

However, i n g e n e r a l a n a l y s i s t h e p e r c e n t a g e s h a r e

showed t h a t food c r o p s had t h e h i g h e s t v a l u e o f money

d i s b u r s e d which was abou t 8 7 % and c a s h c r o p had t h e l e a s t

o f abou t two p e r c e n t .

4 . 3 Loan Repayment and f a c t o r s t h a t a f f e c t l o a n Repayment-

4.3.1 Amount o f l o a n r e p a i d and repayment r a t e

The u l t i m a t e g o a l o f e v e r y c r e d i t programme i s n o t

o n l y t o a l l e v i a t e t h e problems o f fund f o r f a r m e r s b u t

a l s o t o r e c o v e r t h e loaned fund w i t h o r w i t h o u t i n t e r e s t

when dqe . There i s always t h a t problem o f recovegy o f . C

l a o n from t h e b e n e f i c i a r i e s . Ogunbameru 11986) a g r e e d

w i t h t h i s when he no ted t h a t even when c r e d i t i s a t t r a c t e d ,

t h e repayment c a p a b i l i t y i s i n doub t .

Tab le 4 . 1 0 s h o w s ' t h e amount of l o a n r e p a i d and repayment

r a t e s

Table 4.10 Frequency d i s t r i b u t i o n o f l o a n e d , amount and

, t h e repayment r a t e s :

Year Value o f l o a n T o t a l amount To tab Repay

guaranteed due + i n t e re s t Irmunt Rates ( 7 repaid +interest ............................................................

Source : CBN Enugu, 1.997

The repayment ra tes had no t r e n d . I n 1992, t h e

repayment r a t e w d s 1 4 % b u t r e d u c e d d r a s t i c a l l y i n 1993

t o s e v e n p e r c e n t . But o n a v e r a g e , t h e repayment rake: .was

9 8 % o v e r t h e y e a r s o f t h e s t u d y .

4.3.2 F a c t o r s a f f e c t i n g l o a n repayment, ,

Repayment o f l o a n i s v e r y v i t a l i n t h e per formance

of e v e r y c r e d i t scheme.

A good repayment r e c o r d i s a n i n d i c a t i o n o f good p e r -

Eormance b o t h o n t h e p a r t o f b o r r o w e r s and l e n d e r s .

I t e n c o u r a q e s t h e l e n d i n q banks t o expand t h e i r l o a n

p o r t f o l i o .

Table 4 . 1 1 Frequency d i s t r i b u t i o n o f p rob lems e n c o u n t e r e i

Problem No o f Respondents P e r c e n t a g e

Crop f a i l u r e 50 33

Loan misuse

Na tu rBl d i s a s t e r

C o s t o f l o a n

I n p u t c o s t 50 33

T h e f t 9 6

S t r o a g e l o s s e s 2 1 1 4

From table 4 . 1 1 , 50% o f t h e r e s p o n d e n t , f a r m e r s

r e p o r t e d t h a t p r i c e f l u c t u a t i o n was a s e r i o u s impediment

i n l o a n repayment. S i m i l a r l y , 33% o f t h e r e s p o n d e n t s

were of t h e o p i n i o n t h a t c o s t of l o a n was a c o n s t r a i n t i n

l o a n repayment w h i l e 33% o f t h e r e s p o n d e n t s r e p o r t e d t h a t

c r o p f a i l u r e and i n p u t c o s t were b a r r i e r s r e s p e c t i v e l y .

Only s i x p e r c e n t o f t h e r e s p o n d e n t s w e r e of t h e view t h a t

l a o n misuse was a problem. T h i s c o u l d be a t t r i b u t e d t o

l a t e d i sbursement which r e s u l t e d t o d i v e r s i o n o f l o a n t o

. f a m i l y commitments.

4 . 4 Problems f a r m e r s encoun te red i n borrowing

Farmers had b o t t l e n e c k i n borrowing t h r o u g h t h e

scheme. Some o f t h e s e problems a r e shown i n t a b l e 4.12 .\4; . .- 3

Table 4 . 1 2 Frequency d i s t r i b u t i o n o f problems encoun te red

I . . - -

!hy f a rmers i n bo r rowing

Problems N o of r e sponden t P e r c e n t a g e Farmer ----

Long distance t o bank 15 10

Delayed process of loan application

Delay disbursement

Bureaucracy

Inadequate loaned fund

------------------------------------------------------------ Note: Multiple responses were recorded

Source: Field survey, 1997.

T a b l e 4 . 1 2 shows t h a t 3 8 % o f t h e r e s p o n d e n t

r e p o r t e d t h a t d e l a y i n l a o n d i s b u r s e m e n t a c o n s t r a i n t

i n bor rowinq t h r o u g h t h e scheme, w h i l e 3 0 % were o f t h e

o p i n i o n t h a t t h e l e n d i n g banks d e l a y i n p r o c e s s i n g t h e i r

document was a h i t c h and o n l y s e v e n p e r c e n t o f t h e

r e s p o n d e n t s i n d i c a t e d t h a t i n a d e q u a t e l o a n e d fund w a s

a b a r r i e r i n borrowing t h r o u g h t h e scheme.

The a n a l y s i s shows t h a t d e l a y i n l o a n d i s b u r s e m e n t

c o u l d l e a d t o misuse of l o a n as it w a s n o t a d m i n i s t e r e d

when needed.

A3akaiye (1986 ) i n h e r s t u d y by f i n a n c i a l i n s t i t u t i o n s

a f f e c t e d f a r m e r s i n t h e i r demand and u s e o f a c $ + i c u l t u r a l . r

4 . 5 Problems Banks e n c o u n t e r e d i n l o a n d i s b u r s e m e n t

and r e c o v e r y

Most o f t h e banks o f f i c i a l s e n c o u n t e r e d problem i n

t h e d i s b u r s e m e n t and r e c o v e r y o f l o a n . T h i s problems

c o u l d b e a s s o c i a t e d w i t h t h e banks or w i t h t h e f a r m e r s .

T h i s i s shown i n t a b l e 4 . 1 3

Table 4.13: Frequency d i s t r i b u t i o n o f problems

Encoun te red by banks i n l o a n d i s b u r s e m e n t

and r e c o v e r y .

n = 15

Problem No of Bank o f f i c i a l Percentage

High cost of Supervision 13 8 7

Inabi l i ty t o repay the loan 12 8 0

Inadequate personnel 3 2 0

Note: M u l t i p l e r e s p o n s e were r e c o r d e d

Source : F i e l d s u r v e y , 1997.

- r able 4 . 1 3 shows t h a t 87% o f t h e Bank official were

o f t h e view t h a t h i g h c o s t of s u p e r v i s i o n was a problem i n

l a o n d i s b u r s e m e n t and r e c o v e r y . I n a b i l i t y t o r e p a y loaned

fund w a s r e p o r t e d by 80%:..of t h e bank o f f i c i a l w h i l e o n l y

2 0 % were o f t h e ' o p i n i o n t h a t i n a d e q u a t e p e r s o n n e l was

a b a r r i e r .

The h i g h c o s t o f s u p e r v i s i o n c o u l d be a t t r i b u t e d t o

t h e s c a t t e r e d n a t u r e o f b e n e f i c i a r i e s fa rm h o l d i n g s i n

t h e s t u d y a r e a .

Banks a l s o do n o t have o p e r a t i o n a l v e h i c l e s f o r f i e l d

s t a f f l e a v i n g them a t t h e m e r c y , o f p u b l i c t r a n s p o r t

f o r t h e i r r e q u l a r f a rm v i s i t s .

4 .6 Impac t of l o a n a c q u i s i t i o n o n i n p u t c o s t and o n

t h e l e v e l o f fa rm out--put .

4 . 6 . 1 Comparison o f t h e c o s t o f i n p u t u t i l i z a t i o n o f

b e n e f i c i a r i e s w i t h i n p u t c o s t o f n o n - b e n e f i c i a r i e s

Farmer b e n e f i c i a r i e s and n o n - b e n e f i c i a r i e s t h a t

c r o p p e d s o l e r ice, c a s s a v a and yam t h a t was a b o u t one

h e t a r e were compared w i t h t h a t o f non b e n e f i c i 8 r i e s t o _C

know t h e impac t o f t h e scheme on i n p u t c o s t a n 8 l e v e l .

o f fa rm o u t p u t . The c o s t o f i n p u t c o n s i d e r e d i n c l u d e

l a n d p r e p a r a t i o n , a p p l i c a t i o n o f f e r t i l i z e r , weeding

and o t h e r c u l t u r a l p r a c t i c e s t h e f a r m e r s u s e d i n h i s

p r o d u c t i o n . L e v e l o f o u t p u t o f t h e b e n e f i c i a r i e s and

non b e n e f i c i a r i e s were a l so compared. T a b l e 4 . 1 4

shows i n p u t c o s t o f b e n e f i c i a r i e s o n o n e h e c t a r e f a r m

o f r ice p r o d u c t i o n and t h a t o f n o n - b e n e f i c i a r i e s :

'I'able 4 . 1 4 Comparison.. of i n p u t c o s t o f b e n e f i c i a r i e s

w i t h i n p u t c o s t of n o n - b e n e f i c i a r i e s on sole ice produc t io r

of one h e c t a r e .

Year I n p u t c o s t o f b e n e f i c i a r i e s I n p u t c o s t o f

on rice p r o d u c t i o n ( W ) n o n - b e n e f i c i a r i e :

Source: F i e l d s u r v e y , 1997 .

HO: ?,here i s no s i g n i f i c a n t d i f f e r e n t between t he l o a n e d

a n d f a r q e r s o u t p u t . -------- t-t------- ,-t-------- .+---- S . D ~n I d j f I t - c a l l ' I t - c 2102.97 11 1 I

8 1 1.18 I 1. I I I I

Decision Rule' Ho: i s a c c e p t e d because t h e t - c a l c u l a t e d

v a l u e i s ' l e s s t h a n t h e t - c r i t i c a l v a l u e . T h e r e f o r e t h e

c a l c u l a t e d t - v a l u e i s 1.18 w h i l e t h e c r i t i c a l t - v a l u e * i s

-

' 1 . 8 6 . T h i s i m p l i e s t h a t t h e n u l l h y p o t h e s i s s h o u l d no t

be r e j e c t e d .

The r e s u l t of t h e t e s t s u q q e s t s t h a t t h e l a o n r e q u i r e d

by b e n e f i c i a r i e s f o r t h e p r o d u c t i o n o f r ice was n o t

s t a t i s t i c a l l y s i g n i f i c a n t t o t h e c o s t o f i n p u t usage~ . .o f

n o n - b e n e f i c i a r i e s . The p r o b a b i l i t y t h a t t h e obse rved

d i f f e r e n c e r e s u l t e d from sampl ing e r r o r i s h i g h ( i e . g r e a t e r

t h a n 0 . 0 5 ) s o it i m p l i e s t h a t t h e r e i s no s i g n i f i c a n t

d i f f e r e n c e between i n p u t usage o f b e n e f i c i a r i e s and non-

b e n e f i c i a r i e s on r i c e . p r o d u c t i o n .

Talble 4.15 Comparison of i n p u t c o s t o f b e n e f i c i a r i e s w i t h 3;

i n p u t c b s t o f n o n - b e n e f i c i a r i e s on s o l e c a s s a v a p r o d u c t i o n .

Year I n p u t cost of beneficiaries on Input cost of non-

sole cassava production I W ) beneficiaries on sole

Source: Field Survey, 1997.

I I I I I 1 I I I I Mean I S . D I n I d / £ i t - c a l l t - C r i I I I I I \ I

I . B e n e f i c i a r i e s 1 2 0 9 3 1 9 6 6 . 4 l l l . 8 j 0.95;

I I I I 1.86

I I I I i I I Non b e n e f i c i a r i e s 1 1569 1 749.1 1 1 i , I I I I

The Ho i s a c c e p t e d b e c a u s e t h e t - c a l c u l a t e d v a l u e i s

l e s s t h a n t h e t - c r i t i c a l v a l u e . T h e r e f o r e s i n c e t h e

c a l c u l a t e d t - v a l u e i s 0.95 w h i l e t h e c r i t i c a l t - v a l u e is

1 . 8 6 , i t means t h a t t h e n u l l h y p o t h e s i s s h o u l d n o t b e

r e j e c t e d . Hence t h e t e s t of d i f f e r e n c e i m p l i e s t h a t t h e r e

i s no s t a t i s t i c a l d i f f e r e n c e between t h e i n p u t u s a g e o f

b e n e f i c i a r i e s on c a s s a v a p r o d u c t i o n and n o n - b e n e f i c i a r i e s .

T a b l e 4.16 Comparison o f i n p u t c o s t o f beneficiaries *

w i t h n o n - b e n e f i c i a r i e s o f s o l e yam p r o d u c t i o

Source: Field survey, 1997.

I I I Mean I I 1

Non Beneficiaries I 9112 1 ---------------- 1 1 +---------- t

The t - c a l c u l a t e d v a l u e ( 1 . 8 6 ) i s less t h a n t h e

c r i t i c a l t - v a l u e ( 1 . 8 6 ) , s o w e a c c e p t t h e n u l l ' ~ ! h y p o t h e s i s .

Hence, t h e i m p l i c a t i o n i s t h a t t h e r e i s ) n o , , s i g n i f i c a n t

d i f f e r e n c e between i n p u t usage o f b e n e f i c i a r i e s and non-

b e n e f i c i a r i e s o n s o l e yam p r o d u c t i o n .

T h i s a n a l y s i s c o u l d be a t t r i b u t e d t o t h e u s e o f some

t e c h n o l o g i e s l i k e f e r t i l i z e r , p e s t i c i d e s e t c which might

have i n c r e a s e d c o s t f o r b e n e f i c i a r i e s whereas th+;non- . .- b e n e f i k i a r i e s were n o t oppor tuned t o u s e them. *

Comparison o f l e v e l o f o u t p u t o f b e n e f i c i a r i e s w i t h

Non b e n e f i c i a r i e s .

The o u t p u t of b e n e f i c i a r i e s from growing o f sole r ice ,

c a s s a v a and yam w a s a l s o compared w i t h t h a t o f non-

b e n e f i c i a r i e s who had one h e c t a r e s i z e o f f a rm-ho ld ings .

T h i s i s shown i n t a b l e 4 . 1 7

The r e s u l t o f t h e t es t s u g q e s t s t h a t t h e d i f f e r e n c e

be tween o u t p u t o f b e n e f i c i a r i e s o n rice p r o d u c t i o n a n d non-

b e n e f i c i a r i e s i s n o t s t a t i s t i c a l l y s i g n i f i c a n t . The p ro -

b a b i l i t y t h a t t h e o b s e r v e d d i f f e r e n c e r e s u l t e d f rom s a m p l i ~ g

e r r o r s i s h i g h l i e g r e a t e r t h a n 0.05). so it i m p l i e s t h a t

t h e r e i s no s i q n i f i c a n t d i f f e r e n c e be tween o u t p u t o f

b e n e f i c i a r i e s and n o n - b e n e f i c i a r i e s o n r i c e p r o d u c t i o n .

4.18 cornpar i son , 05 o u t p u t o f B e n e f i c i a r i e s w i t h non-

B e n e f i c i a r i e s on s o l e c a s s a v a p r o d u c t i o n .

Year Output of benef ic iar ies on

so le cassava production

Output of non-beneficiaries

on so le cassava production

I t omes ) 1 tonne s ) ------------------------'-----------------------------*---------- LC . .-

Source: Field survey, 1997.

I I I I 1 1 I I I I I I

Bene f i c i a r i e s I I 1 9 . 7 1 1 1 3 . 6 6 1 1 ( 8 1 0 .981 1 . 8 6 I I I I I 1 I I I I I I

Non Berlef i c i a r i e s I 4.85 I 1 . 6 5 1 1 I I I I I I I I I

The a n a l y s i s show t h a t t - c a l c u l a t e d v a l u e which is

0 . 9 8 i s l e s s t h a n c r i t i c a l t - v a l u e which i s 1 . 8 6 .

The i n v a r i a b l y i m p l i e s t h a t t h e Ho: s h o u l d n o t b e r e j e c t e d .

Hence, t h e r e is no s i g n i f i c a n t d i f f e r e n c e between t h e

l e v e l o f o u t p u t of b e n e f i c i a r i e s on s o l e yam of one h e c t a r e

and t h a t of n o n - b e n e f i c i a r i e s . The obse rved d i f f e r e n c e is

a s a r e s u l t o f sampl ing e r r o r s a t 0..05.

T h e r e f o r e w i t h t h e v a r i o u s r e s u l t s , it i m p 1 i . e ~ t h a t - :k t h e r e :is no s i g n i f i c a n t d i f f e r e n c e between input:usage

a

o f b e n e f i c i a r i e s and n o n - b e n e f i c i a r i e s and a l s o on t h e

l e v e l of o u t p u t of b e n e f i c i a r i e s and n o n - b e n e f i c i a r i e s .

T h i s goes a lonq way t o imply t h a t t h e scheme h a s n o t reall ;

p layed much r o l e - i n t h e performance o f A g r i c u l t u r e i n Enugu

S t a t e w i t h i n 1 9 9 2 t o 1 9 9 6 s i n c e t h e r e was no s i g n i f i c a n t

d i f f e r e n c e i n t h e usage o f i n p u t and l e v e l of o u t p u t of

b e n e f i c i a r i e s and n o n - b e n e f i c i a r i e s .

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

Summary . --

The s t u d y was d e s i g n e d t o assess . t h e . per.fdrmance o f

A g r i c u l t u r a l C r e d i t G u a r a n t e e Scheme Fund ; in Ehuqu- date

, - . .(.I ,. . , . . , . Y ' . . . . , b e t w e e n 1992 t o .l99G. - : , .i . ,.. ... ,,. ., : , . ! ( : I ! '! , : ' : .I-:: . - .- .

I t i s e x p e c t e d 'illat t h i s s t u d y w i l l h e l p t o improve t h e

u n d e r s t a n d i n g o f a g r i c u l t u r a l deve lopment i n t h e state,. . . The

s t a t . e s i n d i g e n e s a r e p r e d o m i n a n t l y s m a l l - h o l d e r f a r m e r s .

P r imary d a t a c o l l e c t i o n was done t h r o u g h t h e u s e of

q u e s t i o n n a i r e s which were a d m i n i s t e r e d t o t h e r e s p o n d e n t s

random1 y _ s e l e c t e d . Secondary d a t a w e r e collect&l from . .-

r e v i e w o f l i t e r a t u r e s i n r e l e v a n t works and CBN dadsa. I n a l l ,

2 0 0 r e s p o n d e n t s o f b o t h b e n e f i c i a r i e s and n o n - b e n e f i c i a r i e s

were s e l e c t e d .

The soc io-economic c h a r a c t e r i s t i c s o f t h e r e s p o n d e n t s

showed t h a t 62% o f .them w e r e a b l e b o d i e d f a r m e r s w i t h i n a g e

b r a c k e t o f 21-50 y e a r s o f a q e . Averaqe househo ld s i z e was .

p e r s o n s and a b o u t 7 7 % o f t h e r e s p o n d e n t s had more t h a n f i v e

members i n t h e i r househo ld .

The e d u c a t i o n a l a t t a i n m e n t o f r e s p o n d e n t s showed t - h s t !'

had f o r m a l e d u c a t i o n w h i l e o n l y 11% had no f o r m a l e d u c a t i o n ,

a b o u t 50% o f t h e r e s p o n d e n t s s p e n t between one t o s i x . y e a r s i r

s c h o o l .

-

There was an i n d i c a t i o n o f male dominate i n t h e scheme

w i t h 91% o f t h e r e s p o n d e n t s b e i n g ma les and o n l y n i n e p e r c e n t

f e m a l e s .

Loan a d m i n i s t r a t i o n by ACGSF from 1992 d e c r e a s e d b o t h i n

number and v a l u e u n t i l 1994 b u t i n c r e a s e d from 1 9 9 5 t o 1 9 9 6 .

While t h e a v e r a q e repayment r a t e w i t h i n t h e p e r i o d was 9 8 % ,

1 9 9 3 e x p e r i e n c e d a v e r y low repayment r a t e o f 3 9 % .

I n l o a n a d m i n i s t r a t i o n , i n d i v i d u a l f a r m e r s were f a v o u r e d

i n number and v a l u e o f l o a n more t h a n t h e c o r p o r a t e b o d i e s a n

c o - o p e r a t i v e s o c i e t i e s w e r e t h e l e a s t . A s f o r t h e p u r p o s e s f

which l o a n was g u a r a n t e e d , food c r o p s was most f a v o u r e d ,

f o l l o w e d by l i v e s t o c k and t h e n c a s h c r o p s . 3;

FZrmers e n c o u n t e r e d many problems i n bor rowing f rom t h e :r

scheme w i t h 38% r e p o r t i n g l a t e d i s b u r s e m e n t , o t h e r p rob lems

were d e l a y e d p r o c e s s e s , b u r e a u c r a c y , l o n g d i s t a n c e , i n a d e q u a t

l o a n e d f u n d . Many f a c t o r s m i l i t a t e a g a i n s t l o a n repayments

and t h e s e i n c l u d e p r i c e f l u c t u a t i o n , c r o p f a i l u r e , l o a n

misuse , n a t u r a l d i s a s t e r , c o s t o f l o a n , i n p u t c o s t e t c .

S i n c e t h e scheme c e n t r e s o n t h e l e n d i n g banks t h e y a l s o

had c o n s t r a i n t s i n l o a n r e c o v e r y w i t h a b o u t 87% o f t h e bank

s t a f f r e p o r t i n g h i g h c o s t of s u p e r v i s i o n a s a major problem i

l o a n r e o o v e r v .

A t - t e s t was u s e d t o compare b e n e f i c i a r i e s and non

b e n e f i c i a r i e s t o know t h e impact o f l o a n e d f u n d o n in-put

u s a g e ; and o u t p u t and t h e r e was no s i g n i f i c a n t d i f f e r e n c e

s t a t i s t i c a l l y a t 5%.

5 . 2 Con.clusion,

T h i s work shows t h a t l o a n e d amounts were v e r y low and

n o t d i s b u r s e d on t i m e and a s s u c h t h e n e c e s s a r y outcome was

n o t r e a l i s e d . Farmers were c o n s t r a i n e d t o improve a g r i c u l t u r

due t o poor e d u c a t i o n , l a r g e f a m i l i e s , low l e v e l o f income,

i n e f f i c i e n t p r o d u c t i o n means and b u r e a u c r a c y . ~ e n u i n e p u r s u i

o f t h e below l i s t e d recommendation would no d o u b t make some

remarkab le lee-way i n a g r i c u l t u r a l development .

M a j o r i t y o f women f a r m e r s have n o t b e n e f i t t e q . f r o m t h e '1 C

. C

scheme, t h e i r g r e a t e r p a r t i c i p a t i o n i n a g r i c u l t u r ~ n o t w i t h -

s t a n d i n g . A s a r e s u l t , t h e women s h o u l d be e n l i g h t e n e d

a b o u t t h e scheme and t h e need f o r o b t a i n i n g l o a n . This w i l l

u p l i f t them from t h e i r s u b s i s t e n c e l e v e l t o h i g h e r income and

b e t t e r s t a n d a r d o f , l i v i n g .

Low l e v e l of e d u c a t i o n among t h e f a r m e r s s h o u l d b e

improved by way o f a d u l t e d u c a t i o n b e i n q encouraged . T h i s

w i l l f u r t h e r e n s u r e e a s y a d o p t i o n of modern farm p r a c t i c e s

as w e l l as create g r e a t e r awareness a b o u t l o a n scheme.

he' number and v a l u e o f l o a n a d m i n i s t e r e d s h o u l d b e

i n c r e a s e d . A l so , t h e amount o f l o a n a t t a c h e d a w a i v e r o f

. c o l l a t e r a l s e c u r i t y which i s W10,OOO shou ld b e i n c r e a s e d t o

W20,000 Lo e n a b l e f a r m e r s have enough fund t o q o i n t o p r o d u c t

The dominance of i n d i v i d u a l f a r m e r s i n t e r m s o f c a t e g o r i l

o f borrowers though a good t r e n d r e q u i r e s some a d j u s t m e n t .

Corpora te b o d i e s shou ld be encouraged s i n c e t h e y are more

mechanised i n t h e i r farminq t h a n t h e i n d i v i d u a l f a r m e r s .

T h i s w i l l i n t h e l o n q r u n b o o s t a g r i c u l t u r e i n t h e s t a t e .

The c o - o p e r a t i v e s o c i e t i e s shou ld be g i v e n a t t e n t i o n s i n c e it

i s t h e most e f f i c i e n t channe l o f r e a c h i n g a l a r g e r number of

f a r m e r s .

The l o p s i d e d n a t u r e of l o a n s g u a r a n t e e d i n f a v o u r o f foor

c r o p s does n o t p r e s e n t a b a l a n c e i n a g r i c u l t u r a l development .

For a ba lanced d i e t i n c l u d e s meat and a s such l ive$gock shoulc . *

a l s o b e ' y i v e n a t t e n t i o n . Neg lec t o f c a s h c r o p is jaot a l s o

c a l l e d f o r s i n c e it w i l l e a r n f o r e i g n exchange f o r t h e s t a t e s .

T h e r e f o r e a b a l a n c e shou ld be m a i n t a i n e d between food c r o p s

and o t h e r s e c t o r o f a g r i c u l t u r e .

I n o r d e r t o &.courage prompt repayment of l o a n and h i g h

repayment r a t e s , banks s h o u l d i n c r e a s e t h e farm v i s i t s under-

t a k e n by a g r i c u l t u r a l c r e d i t o f f i c e r s t o e n s u r e t h a t t h e l o a n

g u a r a n t e e d a r e used f o r t h e purposes t h e y a r e i n t e n d e d . T h i s

c a l l s f o r more l o q i s t i c s i n t e r m s o f human and m a t e r i a l

r e s o u r c e s . The i n t r o d u c t i o n o f "Farmers o f t h e y e a r award"

by t h e CBN is commendable and shou ld be adop ted by le-nding

banks t o a c t a s morale b o o s t e r t o i n t e n d i n q fa rmers . . -

Loan a d m i n i s t r a t i o n i n v o l v e s much bureaucracy which

l e a d s t o delay i n d i sbursement , d e l a y i n p r o c e s s i n g o f

documents e t c , a l l t h e s e f o r m a l i t i e s make it cumbersome f o r

f a r m e r s . T h e r e f o r e bank o f f i c i a l s s h o u l d always see t h a t

the s t i p u l a t e d p e r i o d o f p r o c e s s i n g and t h e r u l e s l b y - l a w s

o f CBN are adhered t o s t r i c t l y , s o t h a t t h e l o a n w i l l g e t

t o f a rmers a t t h e t ime o f need.

E f f o r t shou ld b e made by t h e managing a g e n t (CBN) t o

e n s u r e t h a t l e n d i n g banks c l a i m a r e s e t t l e d prompt ly a f t e r

c a r e f u l i n v e s t i q a t i o n s have been conducted t o a s c e r t a i n

t h e t r u e s t a t u s .

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~ ~ i n , 0 . B ( 1 9 7 4 ) , " S o u r c e s and u s e s o f f u n d s i n A g r i c u l t u r e "

American J o u r n a l o f A q r i c u l t u r a l Economics Vo l . 56

No.5 December 1974 .

S u l e , E.1.K (1986) . "Sma l l scale i n d u s t r i e s i n Niqeria

C o n c e p t , A p p r a i s a l o f Government p o l i c i e s and

s u g q e s t e d s o l u t i o n s t o i d e n t i f i e d p r o b l e m s "

Economic and F i n a n c i a l Review, CBN v o l . 2 4 , N o . 4 - 4;

T i n n e r m e i r , R . L ( 1977 ) . "Rural . F i n a n c i a l M a r k e t s a c r i t i c a l

p rob l em area" P a p e r p r e s e n t e d 5or ,--.----- R u r a l D e v e l o ~ e n t - o f f i c e USAD pp . 4

Ukpong, G a n d U .. M a l a w i (1991 ) . F e d e r a l Government P o l i c i e s

i n r e s p e c t o f A g r i c u l t u r a l F i n a n c e " B u l l i o n Vo1.15,

No. 2 , A p r i l - June .

V i q o r , A H S [ 1 9 5 8 ) . " S u r v e y o f A g r i c u l t u r a l C r e d i t i n

N i g e r i a " q u o t e d i n Baum, H (1966 ) A s i t u a t i o n R e p o r t

of A g r i c u l t u r a l C r e d i t i n N i g e r i a " CSNRD-3 USAID,

Von Pischke, J.D and D.W Adams (1980)rWFunqibility and the

Desiqn and Evaluation of ~gricultural Credit Projects

American Journal of Agricultural Economics, Vol. 62

No. 4, pp 719 - 726.

Wells, J . C (1974 ), "Agricultural Policy and Economic Growth

in Nigeria 1962 - 1968" Ibadan, Bxford Press.

A P P E N D I X

DEPARTMENT OF AGRICULTURAL ECONOMICS

U N I V E R S I T Y O F NIGERIA

NSUKKA.

M . S c RESEARCH P R O J E C T

RESEARCH T O P I C : AN EVALUATION O F T H E ROLE O F AGRICULTURAL

CREDIT GUARANTEE SCHEME FUND ( ACGSF) IN AGRICULTURAL

DEVELOPMENT OF ENUGU AND EBONY1 S T A T E , 1992 - 1 9 9 6 .

Q U E S T I O N N A I R E FOR FARMERS

P l e a s e t i c k "x" f o r t h e correct a n s w e r o r f i l l i n .$orrectly 3r

w h e r e applicable.

S E C T I O N A SOCIO-ECONOMIC C H A R A C T E R I S T I C S OF FARMERS

...................................... 1. S t a t e of O r i g i n :

2 . A g r i c u l t u r a l Z o n e : ................. ;................. 3 . Eocal G o v e n n m e n t A r e a :............................... 4 . What i s your age range: . ..............................

................................................. 5 . Sex:

...................................... 6 . M a r i t a l S t a t u s :

7 . H o u s e h o l d s i z e : N o . of Wives: ...................... ................. N o . ,of D e p e n d a n t s :

............. . 8 . Are you a p a r t - t i m e o r f u l l t i m e f a r m e r : .

........... 9 How long have you been i n f a rminq b u s i n e s s :

10 I n d i c a t e your secondary o c c u p a t i o n i f ,any:............

........ 11 I n d i c a t e your e d u c a t i o n a l a t t a i n m e n t i f any:. .

1 2 What i s your income p e r annum? .......................

SECTION B: LOAN DATA

1. Are you aware of t h e e x i s t e n c e o f ACGSF?

a . . Yes ............ b. N o ......... 2. If no, what a r e your r e a s o n s ?

........................ a Don ' t l i k e bank .bor rowing

b Not l i t e r a t e : .................................... - c Don ' t have c o l l a t e r a l . ............................

. - % ; d . High i n t e r e s t ra te : . . ................... ;..........

3

e S p e c i f y o t h e r s ................................... -

3. Have you e v e r o b t a i n e d c r e d i t unde r ACGSF?

........... a Y e s ........................ b. NO

4. If y e s , when d i d you f i r s t q e t i n v o l v e d i n t h e Scheme?

5. How many t i m e s have you b e n e f i t t e d from t h e scheme?

6 . What i s t h e volume of Aoan o b t a i n e d f o r t h e f o l l o w i n g

y e a r s ?

--------- L _ _ t - _ _ _ _ I I I I ---I---- I 1 I I

Year Amount Applied for 1 Arrount Approved I Amount I In terest I I I

I Received Rate I

I I I I I - -

I - - -- & . . + . - - I

I _f

I I I I

I I I I

I I I I I

I I I 199 2 I I t '

I I

I I I I I

I I I 1993 I

I I I I

I I I

I I I I

I 1994 I I I I I I I

I I I

I I I 1 9 9 5 , I I I

I I I I

I . I I I 1996 I I

I I I I

I I I I I

I - I I I I --- I I-- .- - - - - I I

7- -- " -

7 . What a r e your o t h e r s o u r c e s of l o a n ?

a . In fo rmal i n s t i t u t i o n . . . . ............................ :it;

b -- ini is try o f A g r i c u l t u r e ..................?#.......... *

c Co-opera t ive .........'........................:.....-. d Other s p e c i f y .........................................

8 . What was your s o u r c e of i n f o r m a t i o n qbo.ut ACGSF?

Ij Extens ion a q e n t s .................................... ................................................. c Bank

9 . Do you p r e f e r o t h e r s o u r c e s o f l aon t o ACGSF?

a eyes . . . . . . . . . . . . . . . . . . . . . . b'. N O . . . . . . . . . . . . . . . .

1 0 . What purpose d i d you p u t t h e l o a n i n t o ?

a Farming a c t i v i t y .....................................

.................... b. Nsn, .~farm a c t i v i t y

c Both ................................

fa rm a c t i v i t y , which o f t h e f o l l o w i n g e n t e r p r i s e ?

................. Food c r o p

................. Cash c r o p

L i v e s t o c k ................ F i s h e r y ...................

............... Market ing and s t o r a g e

......................... P r o c e s s i n g

....... Farm m a c h i n e r y / h i r e s e r v i c e s .

...................... O t h e r s s p e c i f y

1 2 . Which c a t e g o r y o f f a r m e r s d i d you f a l l i n t o ?

a I n d i v i d u a l ............................. %; -

'b -. ................... C o o p e r a t i v e s o c i e t y *

c C o o p e r a t i v e body ......................

13 . Was t h e amount l e n t t o you enough f o r t h e pu rpose?

a Y e s ............... b . N o .............. 1 4 . I f y e s , w a s t h e l o a n q i v e n t o you?

a More t h a n r e q u i r e d .............. ............... b J u s t as r e q u i r e d

c L e s s t h a n r e q u i r e d .............. 15 How w a s t h e l o a n g i v e n t o you?

.............. a Cash ............. b. No

1 6 . I f b o t h , i n what p r o p o r t i o n ?

a. Cash b. Kind ... ........ .. .............. A

7 What d i d you o f f e r a s c o l l a t e r a l f o r t h e l o a n ?

............ a . Landed p r o p e r t y

......... b Moveable p r o p e r t y

c O t h e r s s p e c i f y ...........

18. How d i d you v iew t h e c o l l a t e r a l r e q u i r e m e n t o f t h e bank

a Too d i f f i c u l t t o m e e t . . . . . ......... b Easy ..............................

..................... c O t h e r s p e c i f y

1 9 . Were you a b l e t o a f f o r d t h e c o l l a t e r a l r e q u i r e m e n t by

t h e bank?

............... . a Y e s b N o . . . . . . . . . . . . . . .

SECTIOY C: L(FARMERS PROBLEM)

5i'

1. What i s t h e d i s t a n c e from your h o u s e t o t h e s o u r c e o f

l o a n ( K M ) ....................... 2 How many t i m e s d i d you v i s i t ACGSF h e a d q u a r t e r s b e f o r e

c r e d i t was i :g iven t o you? ....................... -

3 . How o f t e n d i d ' t h e c r e d i t s u p e r v i s o r ' v i s i t your farm?

4 . A r e you s a t i s f i e d w i t h t h e i r s u p e r v i s o r y s e r v i c e s ?

.................. 5. If No, how s h o u l d t h e s u p e r v i s i o n be?.

6 How d i d you f i n d t h e l e n d i n g e x e r c i s e g e n e r a l l y ?

a Cumbersome.. ........................

...................... b. S h o r t . m o r a t o r i u m . . .

c O t h e r s s p e c i f y ..........................

............... 7 How long d i d it t a k e t o approve t h e l o a n ?

8 . When e x a c t l y was t h e l o a n d i s b u r s e d ? . . . . . . . . . . .

a. Before i t was needed.. ....... b A t t h e t ime it was needed. . . ... c A f t e r it was needed .............

9 . Did t h e d i sbursement t i m e o f t h e l o a n a f f e c t your farm

o p e r a t i o n s :

a Y e s . . . .............. b. No ............ 1 0 I f t h e l a o n was d i s b u r s e d l a t e , what r e a s o n s were

r e s p o n s i b l e ?

a Paper work t o o much ......... k . #

b - Delay i n pcocess ing ........ * ........ c Had problem s e c u r i n g g u a r a n t o r

d O t h e r s s p e c i f y ...............

11. Is t h e d i sbursement c a r r i e d o u t ?

a I n s t a l l m e n t a l .............. b F u l l draw-down ............

12." A t what i n t e r v a l s w e r e you a l lowed t o draw-down t h e

remaining i n s t a l m e n t ? .................. 1 3 . How muchjdid you s p e n d : i n p r o c u r i n g t h e l o a n e a c h y e a r ?

....................................... 1 4 . ' A t what i n t e r e s t r a t e d i d you o b t a i n t h e l o a n ? . . :.......

. 5 What problem d,id you e n c o u n t e r i n t h e c o u r s e of your

bo r rowing?

........... a Cumbersome p r o c e s s . . .

...... b Lack of knowledge o f r a t e s and r e g u l a t i o n

............ c G r a t i f i c a t i o n by t h e bank o f f i c i a l s

d O t h e r s p e c i f y ..................... 1 6 . S p e c i f y when you a r e r e q u i r e d to.;pay back t h e l o a n . .. 1 7 Does it c o i n c i d e w i t h t h e p e r i o d o f h a r v e s t ?

..... a Y e s . .......... b. No .-. 1 8 . DO t h e l e n d i n g bank s t a r t r e c o v e r y o f l o a n when?

a B e f o r e t i m e ......... b . When it i s d u e . . .... 1 9 . Do you a lways r e p a y your l o a n a s a t when due?

a Y e s . . ............... b. N o ......... 20 I f No, why? .. :k

:* ;a I n a d e q u a t e r e t u r n s . . . . . . . . . . . . . . . . . . . . * b Crop f a i l u r e ........................ - c Low p r i c e s ............................ d L a t e d i s b u r s e m e n t ....................... e O t h e r s s p e c i f y ..........................

21. Did t h e d i s b u r s e m e n t t i m e o f t h e l o a n a f f e c t repaymen

a d v e r s e l y ?

................ a Y e s ................ b. No

22. From which s o u r c e do you s e t t l e your l o a n ?

............. a . S a l e s f rom farm p r o d u c t

....................... b By borrowing

.......... c Income r e a l i s e d f rom non-farm a c t i v i t y

.............. d O t h e r s s p e c i f y

23. A r e you i n d e b t e d t o t h e bank now?

a Y e s ......... b. No.........

24 P l e a s e , s t a t e t h e amount r e p a i d i n t h e f o l l o w i n g y e a r s .

-----.-..- - -.-.--- --.-.-..- - I I I I I I I 1 I

Year 1 Amount I-! I I I

Repaid I T o t a & I I 1 I P r i n c i p a l I I n t e r e s t # I I I I I I I I

------.---..I l..-...--..---.- I ----.---- A-. .-.--

1 I I 1 I I I I I I I I

1992 I I I I I I I I I

1993 I I I

I I I I I &;

1994- I '

I .C I I I 1 1 t* I I I

199 5 I I I I 1 I I I I

1996 I I I

I I I I I I I I I

-.- I -7

I 1 7-- ., ..--

SECTION B: MODERN TECHNOLOGY

1. What t y p e o f f a rm b u s i n e s s were you o p e r a t i n q ?

a Crop ................ b L i v e s t o c k ...........

........ c Mixed f a r m i n g

. 2 . I n t h e t a b l e below s p e c i f y t he number and s i z e o r

aver ' age s i z e o f y o u r fa rm where a p p l i c a b l e ?

Food Crop Average s i z e

R i c e

Cassava

Yam

Maize

V e g a t e b l e

T e e c r o p s I I I

I n i n g i a g a b o n e n i s i s

Orange

Oil palm

Cocoa

O t h e r s p e c i f y

S h e e p l g o a t

C a t t l e

O t h e r s p e c i f y

3 . I f you a r e a c r o p f a r m e r , which o f t h e f o l l o w i n g c r o p p i n !

p a t t e r n do you p r a c t i c e ?

a . Mono c r o p p i n g

b. Mix_ed c r o p p i n g . . . . . . . .

.............. c: Crop r o t a t i o n

d S h i f t i n g c u l t i v a t i o n ...... .............. . e Other s p e c i f y

4 . If you a r e a l i v e s t o c k fa rmer which o f t h e f o l l o w i n g

management p r a c t i c e do you employ?

Free r a n g e ........... .... Semi i n t e n s i v e . . . .

I n t e n s i v e ............ What t y p e of s t o c k do,.you use i n your farm?

............ ............. Local b.Improved

What a r e t h e s o u r c e s o f t h e s t o c k used i n your farm?

............... Local market

M i n i s t r y o f A g r i c u l t u r e ............ k .

O t h e r s s p e c i f y ..................... 3.

Do you use i n s e c t i c i d e , d r u g s o r o t h e r a q r o chemical

i n your farm?

............. ~ e r t i l i z e r ( a ) Yes (b) N o ......... ii, Manure ( a ) Yes ............. . (b) No ........

..8. Do you u s e machinery f o r your farm o p e r a t i o n ?

a Y e s ..................... b. N O . . . . . . . . . .

9 . O n t h e a v e r a g e how much w e r e you spend ing on i n p u t

a n n u a l l y b e f o r e you g o t invo lved i n ACGSF?.........

1 0 . With t h e scheme, how much do you spend on t h e averaqe

on i n p u t s ? . . . . . . . . . . . . . . . . . . . . . . .

A

1 . E s t i m a t e c a s h income from fa rm a c t i v i t i e s i n t h e

f o l l o w i n g y e a r s 3 -------------- -L----IL-----,------------------------------- I I I I

I m u n t I

E n t e r p r i s e 1 ...................... 1992 1 1993 1994 ( 1995 : 1996 r----------- T----- T-'----r-'-'-------- 1

Food c r o p s

Cash c r o p s I

L i v e s t o c k I I I

F i s h e r y I I I

S t o r a g e / m a r k e t i n g I I I

O t h e r s p e c i f y

1 2 . How do you:. see t h e services o f ACGSF?

a. P o o r . . . . . . . . . . . ... ( b ) Good... . . 4i -

c F a i r l y ........... ( d ) S a t i s f a c t o r y ...;"...... *

13. How d o you t h i n k t h e scheme c o u l d b e improved?

............... a I n c r e a s e amount d i s b u r s e d

b - S c r a p - - c o l l a t e r a l ..................... ....... c S p e e d y . p r o c e s s i n g o f a p p l i c a t i o n

d O t h e r s s p e c i f y .......................... 1 4 . What p rob lems a f f e c t e d your repayment r a t e ?