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CREDIT ACCESS AND THE PERFORMANCE OF SMALL SCALE AGROBASED ENTERPRISES IN THE NIGER DELTA REGION OF NIGERIA


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CREDIT ACCESS AND THE PERFORMANCE OF SMALL SCALE AGROBASED ENTERPRISES IN THE NIGER DELTA REGION OF NIGERIA

ABSTRACT
The study was designed to analyze credit access and performance of small scale agrobased
enterprises in the Niger Delta region of Nigeria. A multi-stage sampling technique
was adopted in selecting 264 and 96 agro-based enterprises that accessed informal and
formal credit respectively, through the use of structured questionnaire and oral interview.
A total of 360 respondents were selected and used for the study. Socio-economic
characteristics of the enterprises were described using descriptive statistical tools such as
percentages, means and frequencies. The logit model was used to examine enterprise
characteristics that had significant influence on informal and formal credit access by
small scale agro-based enterprises. The Heckman model was used to examine the factors
affecting informal and formal credit amount accessed. The Poisson regression model was
employed to examine the factors affecting frequency of informal or formal credit access
by the enterprises. Current ratio and return on capital were employed to examine the
performance of enterprises that borrowed from informal and formal credit markets in the
area. Separate treatment of Informal and Formal Credit served to identify the similarities
and differences between the credit source concerning the determinants of credit access,
amount of credit accessed, frequency of access, credit default and financial performance
of the enterprises. The results showed that 60.13% of small scale agro-based enterprises
had access to the informal credit market, whereas only 21.86% had access to formal
credit market. Enterprise age (p<0.10) and social capital (p<0.01) had significant and
positive influences on informal credit access, while gender (p<0.01) had a negative
influence on informal credit access. Formal credit access was positively influenced by
enterprise age (p<0.05), enterprise size (p<0.05), collateral (p<0.05) and education
(p<0.10).

Informal credit amount received was positively influenced by enterprise size
(p<0.10), guarantor (p<0.05) and social capital (p<0.01), and negatively influenced by
gender (p<0.05) and income of enterprise (0<0.01). Formal credit amount received was
positively influenced by age of enterprise (p<0.10), size of enterprise (p<0.05), collateral
(p<0.01) and social capital (p<0.05). However, influence on income of enterprise
(p<0.01) had a negative effect. Frequency of informal credit access had a significant
positive influence on experience in borrowing (p<0.01) and social capital (p<0.01), while
it had a significant negative influence on income of enterprise (p<0.01) and non-agrobased
income (p<0.01). Frequency of formal credit access was positively influenced by
education (p<0.10) and collateral (p<0.01), and negatively influenced by interest amount
(p<0.01) and non-agro-based income (p<0.01). Furthermore, income of enterprise
(p<0.01) had a significant positive effect on informal credit default, whereas, gross profit
margin (p<0.01), interest amount (p<0.05) and shock (p<0.01) had a significant negative
effect on informal credit default. Also, formal credit default was negatively influenced by
gender (p<0.01), education (p<0.05), gross profit margin (p<0.01) and shock (p<0.05).
There was a significant difference between mean return on capital employed by
enterprises that borrowed from formal and informal credit institutions, hence their
performances varied. It was recommended that Government and development partners
in the region should realize these changing realities and designed appropriate credit
packagesfor the enterprises in the region. This will go a long way in complementing the
amnesty programme of the Federal Government of Nigeria in the region.
TABLE OF CONTENT:

CHAPTER ONE
INTRODUCTION
1.1     Background of the Study
1.2     Statement of the Research Problem
1.3     Objectives of the Study
1.4     Significance of the Study
1.5     Research Questions
1.6     Research Hypothesis
1.7     Conceptual and Operational Definition
1.8     Assumptions
1.9     Limitations of the Study

CHAPTER TWO
LITERATURE REVIEW
2.1     Sources of Literature
2.2     The Review
2.3     Summary of Literature Review

CHAPTER THREE
RESEARCH METHODOLOGY
3.1     Research Method
3.2     Research Design
3.3     Research Sample
3.4     Measuring Instrument
3.5     Data Collection
3.6     Data Analysis
3.7     Expected Result
CHAPTER FOUR
DATA ANALYSIS AND RESULTS
4.1     Data Analysis
4.2     Results
4.3     Discussion
CHAPTER FIVE
SUMMARY AND RECOMMENDATIONS
5.1     Summary
5.2     Recommendations for Further Study
References
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