Loan Repayment Capacity of Cooperative Farmers in Ohaukwu Local Government Area of Ebonyi State, Nigeria

Abstract

Loan repayment is crucial for the long-term sustenance of the credit institutions. But despite the repayment abilities of borrowers, studies showed that the loan repayment capacities of cooperative farmers in Ohaukwu LGA of Ebonyi state seems not to have been empirically documented. Both multistage and purposive sampling techniques were employed to generate data from 80 cooperative farmers using questionnaire administered as interview schedule. Data collected were analysed using both descriptive statistics-percentages and mean, and inferential statistics-principal component factor analysis. Results showed that about 65 % of the cooperative farmers were of producer cooperative society while others belongs to either consumer or thrift and saving cooperative societies. The cooperative farmers repaid about 78 % of the total amount loan obtained. The study identified nature of investment, farm yield, household size, health condition of household member, time of loan disbursement, interest rate of the loan, amount of loan obtained, collateral value, and repayment conditions as the factors influencing cooperative farmers loan repayment, while high interest rate, amount of loan obtained, late disbursement, natural hazard, high illiteracy among co-operator, diversion of fund to non-farm venture, family size, low farm output/income, and weather vagaries were identified as constraints to loan repayment among cooperative farmers. Based on the findings, the study recommended that financial institutions should address the issue of inadequate credit extended to cooperative farmers by increasing credit supply to them as such will help to improve productivity and income generation.