Analysis on Determinants of Loan Repayment among Rice Farmers in North-West Agricultural Zone of Benue State, Nigeria

• Published in: Asian Journal of Advanced Research and Reports Vol. 19; no. 6; pp. 198 - 210
• Main Authors: Aondover, Burbwa Philip, Enemune, Ameh David, Ozoko, Ogebe Francis
• Format: Journal Article
• Language: English
• Published: 19.06.2025
• Subjects: Humanities and Social Sciences
• ISSN: 2582-3248; 2582-3248
• DOI: 10.9734/ajarr/2025/v19i61053

In developing countries, the role of agricultural credit is closely related to providing the needed resources which farmers cannot source from their own available capital. Little or none of these studies examined the influence of socio-economic factors on loan repayment ability among rice farmers in the North-West agricultural zone of Benue State, Nigeria. This study is therefore intended to fill the existing gaps through investigating factors affecting loan repayment of rice farmers in the study area, as well as ascertaining which of these factors significantly influence loan repayment in the study area. Several reasons have been advanced for low repayment ability among farmers in less developed countries (LDC). Reasons have ranged from deliberate refusal to pay by some farmers to non-repayment of loans arising from loss of income due to the devastating effects of crop failure and ill health. This study investigated the determinants of loan repayment by rice farmers in Benue State, Nigeria. The study focused on analysing socio-economic characteristics, loan performance, credit adequacy and the key factors affecting repayment: describe the socio-economic characteristics of respondents, assess the factors that affect loan repayment among rice farmers, examine the level of loan repayment performance and ascertain the credit adequacy of the respondents in the study area. The study was conducted in the North-West agricultural zone of Benue State, Nigeria. Primary data were collected with the aid of a well-structured questionnaire from 424 randomly selected rice farmers. Data were analysed using descriptive statistics, credit adequacy ratio (CAR), loan repayment index (LRI) and Ordinary Least Squares (OLS). Data covering socio-economic characteristics such as age, farm size, farming experience with credit use, amount of loan obtained, amount of loan repaid, income earned, etc., were elicited from respondents through the use of a well-structured questionnaire. Results showed that males were dominant (75.47%) in rice production, and the majority (42.45%) were between 41-50 years, with most (48.35%) farmers accessing loans exclusively from informal sources. Also, the result found that the majority (76.65%) of the sampled rice farmers indulged in loan diversion to family uses. Loan performance indices estimated showed that only 25.94% of the borrowed amount was repaid as due. This repayment rate is significantly below optimal levels, raising concerns about the effectiveness of the existing loan mechanism. This situation indicated a low repayment performance of the farmers in the study area. Empirical results from regression analysis showed that the sex of the respondents, loan from other sources, collateral value, amount of money borrowed and total income of the farmers were the significant factors that influenced loan repayment. It was concluded that low repayment limited effective loan administration in the study area. It was recommended that regular monitoring by lenders should be heightened to ensure prompt repayment.