Financing of Livestock Production under the Agricultural Credit Guarantee Scheme Fund in South-East, Nigeria

Abstract

The Agricultural Credit Guarantee Scheme Fund (ACGSF) was established by the Federal Government in 1977 in order to encourage commercial and other deposit banks to participate in increasing the productive capacity of farmers through a credit lending programme that will meet the farmers’ needs. However, there is a growing concern that credit flow from the financial institutions under the scheme to livestock farmers is poor, thus leading to inadequate production and consequently high prices of meat in the markets. The study therefore, is focused on the financing of livestock production by financial institutions under the Agricultural Credit Guarantee Scheme Fund in South-East states. The specific objectives of the study were to: (i) identify factors influencing credit accessibility of the livestock farmers, (ii) analyse the effect of loan obtained from the financial institutions on the farmers’ performance, (iii) determine the repayment performance of the loan beneficiaries and its determinants, (iv) analyse the creditworthiness of the loan beneficiaries and (v) identify the problems encountered by the farmers who obtained loan from the financial institutions under the scheme. Two states ( Ebonyi and Imo states ) were purposively selected from the five South-East states. Simple random sampling technique was used to select 90 beneficiaries in Ebonyi state and 105 beneficiaries in Imo state which gave a sample size of 195 representing 70% of the sampling frame. Data were collected from December, 2011 to April, 2012 using a structured questionnaire. Data collected were analysed using descriptive statistics, multiple regression, logit and discriminant models.The lending institutions were able to give 52.5% of the loan demand of the livestock farmers. The logit result showed that the significant determinants of the farmers’ accessibility to credit were marital status, educational level, farming experience and total income. The loan obtained by the farmers had significant effect on their income at 5% level of probabilit. The repayment performance of the farmers was high (90.1%). The multiple regression analysis showed that amount of loan obtained, age of the farmer, educational level, household size, livestock value and total income were significant factors influencing loan repayment of the farmers. The discriminant analysis on the credit worthiness of the loan beneficiaries showed that 78.8% of the original grouped cases were correctly classified. The analysis also showed that age, gender, major occupation, educational level, farming experience, livestock value, household size and total income of the farmers made positive contributions to credit worthiness. The problems encountered by the loan beneficiaries in their farming activities included poor monthly returns, high interest rate, insufficient loan and high cost of livestock feed.