Determinants of Farmers’ Demand for Micro Finance: The Case of A Rural Community In Nigeria

Abstract

The finance debacle must be tackled if the productivity problem facing agricultural development in under developed countries such as Nigeria is to be solved. This, in essence, implies that micro finance must be made more operational and effective in these countries since the bulk of the farmers are rural based small scale agriculturalists that lack access to the regular institutional sources of finance. This study thus examined the socio - economic determinants of demand for micro finance by farmers in a rural community in Nigeria. The study used the Tobit regression model to analyze the demand for micro finance by farmers in the study area. Five of the variables examined had significant effects on the demand for micro finance. These are household size, farm size, return from farm activities, gender, and time lag of disbursement of loan. The findings suggest that considerable opportunity exist for increased farm productivity in the area if the finance constraint is effectively handled. Relevant recommendations were offered to this regard.

Keywords: Determinants, Demand, Micro Finance, Farmers, Nigeria