Factors Influencing Loan Repayment Performance among Smallholder Rice Farmers under the Anchor Borrower Programme in Sokoto State, Nigeria

Abstract

This study determined the factors influencing loan repayment performance among the dry season smallholder rice farmers who benefitted from loan under the Anchor Borrower Programme (ABP) in Wammako, Bodinga and Kware Local Government Areas (LGAs) of Sokoto State, North-west Nigeria. Multi-stage sampling technique was used to select a sample size of 189 respondents. Primary data were collected using structured questionnaires. Data were analyzed using descriptive statistics, loan performance indices and two-limit Tobit regression. The results showed that 11% of the beneficiaries made full repayment while 37% and 52% made partial and no repayment respectively. Moreover, 8%, 18% and 8% of the loan disbursed were fully repaid in Wamakko, Gwadabawa and Bodinga LGAs respectively. Also, 47%, 39% and 71% were held by beneficiaries who did not make any repayment in the three LGAs, suggesting poor loan repayment in the study area. Results from the Tobit regression model revealed that off farm income, amount of loan granted and numbers of contact with extension agents were the statistically significant factors that influenced loan repayment performance under the ABP in the study area. Reasons for default in repayment includes delay in loan disbursement, supply of unsuitable seed, destruction by birds and flood disaster. It was recommended that moral persuasion be used in encouraging the beneficiaries to repay the loans.