Analysis of Informal Credit Operations among Farmers In Atisbo Local Government Area of Oyo State, Nigeria

The study explored the operations, (savings and loan procurement), as well as the problems and prospects of the informal financial institutions in ATISBO Local Government Area of Oyo State, Southwest Nigeria. The sampling technique used was Stratified Random Sampling to select threevillages from the area and Systematic Random Sampling of respondents was conducted to select 120 respondents. With a mean age of 41.4 years, most of the respondents’ ages fell between 40 and 60 years. Some of the respondents (16.7%) had no formal education though they were managingfairly large household sizes, with a mean of 10 members/ household). 72.5% have no formal education, though the vast farming experience of the respondents; (mean 21.5 years) has been a facilitating factor in productivity improvement in the locality. Savings mobilized per year rangedfrom N 96,000 to N115, 000.00 with a mean saving of N 72,840.00. The results showed that the age, years of residency in the locality, education of the farmers, farm size and gender, all have significant relationships at 5 % with the volume of loan procured by the respondents. R2 value and adjusted R2 were 67% and 64%, F values were calculated as 13.2 respectively. The Linear function was selected as the equation of best fit. From the estimated linear lead equation, F-value was significant at 1% level of confidence, implying that the variables all have collective impact on the volume of savings mobilized from the informal sources by the respondents, hence the goodness of fit of the selected function. Some of the problems discovered on the operation of the informal services were short term expectation on loans repayment, inhibiting attitudes of group members, unsynchronized contributions to savings due to non-aligned cash flow in farming, elusive attitudes of money collectors and group coordinators and simultaneous requests by members for funds (loans), due to specific timing in farm operations and domestic requirements. The prospects of the informal financial services and groups in Nigeria could be improved if relevant policies are formulated and geared towards support for agricultural sectors and increase in the net farm income of farmers in such a way that the marginal propensity to save and invest more on farming could increase. The need to implement policies to ensure sustainable integration of the indigenous savings institutions into the operations of the Community Banks through the mobile rural banking strategies was suggested. Intensive use of extension services to facilitate adult literacy and learning among rural dwellers; especially farmers, to reduce illiteracy and empower farmers for savings, investment on agriculture as well as improved livelihood were also suggested.Key words: Informal Credit Operation, Savings, ATISBO L.G.A, farmers, Oyo State