Demand for formal credit among small scale cassava farmers in Kogi State, Nigeria: a double hurdle analysis

In Nigeria, one of the major constraints to the decline in agriculture’s contribution to the economy is inaccessibility to capital by small scale farmers. This study therefore examined the determinants of access and demand for formal credit by small scale cassava farmers in Okene, Okehi and Adavi Local Government Areas of Kogi State. Data were collected from 120 cassava farmers; descriptive and double hurdle model were used to analyse the data. The result of the analysis showed that the sampled farmers were young with an average of about one hectare of farm land. Majority of the farmers were literate and experienced in farming. The result from the first hurdle revealed that cassava farmers’ access to formal credit was influenced by farm size, farming experience at 5% probability level and farm income at 1% probability level. On the other hand, farmers’ age, level of education and cost of borrowing significantly influenced the amount of loan demanded at 1% probability level. Lack of collateral/guarantor, administrative bottleneck and unfriendly attitude of workers of the financial institutions with weighted mean of 3.47, 2.88 and 2.77 respectively were the major constraints to formal credit access and demand among cassava farmers. It was therefore recommended that cassava farmers should form viable cooperative societies to pull their resources together for easy access to formal credit. Financial institutions workers should be friendlier and simplify the processing and disbursement process of credit administration.Keywords: Determinants, capital, financial institution