International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

 

IMPACT OF INFORMAL AGRICULTURAL FINANCING ON AGRICULTURAL PRODUCTION IN THE RURAL ECONOMY OF KWARA STATE, NIGERIA
DR. W. A. LAWAL, DR. I. B. ABDULLAHI

ABSTRACT
The rural farmers who constitute a large percentage of food producers in Nigeria have problem of access to financial resources from the formal financial institutions because of the institutions’ stringent conditions and location. In effect, most of the rural farmers have to rely mainly on the informal financial institutions for funding. The objective of this study was to examine the impact of informal agricultural financing on agricultural production in the rural economy of Kwara State, Nigeria. The source of data for this study was mainly primary that was collected using structured questionnaire from sampled farmers who were participating in three informal financing schemes namely: (i) periodic savings; (ii) money lending; and (iii) rotating savings in nine Local Government Areas spread through the three senatorial districts of Kwara State, Nigeria. Employing a multi-stage random sampling method, a total of 1,350 farmers were  for the study. The returned 1,249 copies of questionnaire were then processed using Ordinary Least Square method of regression analysis. The findings indicated that the institutions had positive impact on agricultural production through only rotating savings being statistically significant at 10% level of significance and t-value of 1.41. Based on the results, the study recommended that the rotating loans should serve as an impetus to agricultural financing among the farmers in the rural areas with the improvement on the other informal financing sources with a view to increasing the membership drive of all the informal institutions.

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