An Impact Assessment of Agricultural Credit on Rural Farmers in Nigeria

Abstract

In Nigeria, despite the fact that agriculture have significant contribution to the economy, it has not been given adequate attention as required.  Data were collected from the primary sources and a total of 500 questionnaires were administered of which 300 copies were properly completed and retrieved.  The study appraised the impact assessment of agricultural credit on rural farmers in Nigeria and generally discovered that much is yet to be done to boost agriculture by encouraging farmers via adequate agricultural credit without strings.  The results also indicate that unregulated private money lenders (53.33%) constitute the major source of credit which is not healthy for an economy that is ready to grow.  It was equally clear that the much needed banks in the rural areas are mainly found in the urban areas leaving the rural farmers without formal sources of credit. The major limitations or challenges in accessing agricultural credit as found in the report include; high interest rates, bureaucratic bottlenecks, late approval of loans, unnecessary request for guarantors and collateral. It was however recommended that the federal Government in collaboration with banks should create credit instruments and services that are tailored to the risk and cash flow patterns in the agricultural sector to avoid or reduce the level of the aforementioned challenges.

Key Words: Agricultural credit, Rural farmers, Credit risk