ABSTRACT
The study was designed to analyze credit access and
performance of small scale agrobased
enterprises in the Niger Delta region of Nigeria. A
multi-stage sampling technique
was adopted in selecting 264 and 96 agro-based enterprises
that accessed informal and
formal credit respectively, through the use of structured
questionnaire and oral interview.
A total of 360 respondents were selected and used for the
study. Socio-economic
characteristics of the enterprises were described using
descriptive statistical tools such as
percentages, means and frequencies. The logit model was used
to examine enterprise
characteristics that had significant influence on informal
and formal credit access by
small scale agro-based enterprises. The Heckman model was
used to examine the factors
affecting informal and formal credit amount accessed. The
Poisson regression model was
employed to examine the factors affecting frequency of
informal or formal credit access
by the enterprises. Current ratio and return on capital were
employed to examine the
performance of enterprises that borrowed from informal and
formal credit markets in the
area. Separate treatment of Informal and Formal Credit
served to identify the similarities
and differences between the credit source concerning the
determinants of credit access,
amount of credit accessed, frequency of access, credit
default and financial performance
of the enterprises. The results showed that 60.13% of small
scale agro-based enterprises
had access to the informal credit market, whereas only
21.86% had access to formal
credit market. Enterprise age (p<0.10) and social capital
(p<0.01) had significant and
positive influences on informal credit access, while gender
(p<0.01) had a negative
influence on informal credit access. Formal credit access
was positively influenced by
enterprise age (p<0.05), enterprise size (p<0.05),
collateral (p<0.05) and education
(p<0.10).
Informal credit amount received was positively influenced by
enterprise size
(p<0.10), guarantor (p<0.05) and social capital
(p<0.01), and negatively influenced by
gender (p<0.05) and income of enterprise (0<0.01).
Formal credit amount received was
positively influenced by age of enterprise (p<0.10), size
of enterprise (p<0.05), collateral
(p<0.01) and social capital (p<0.05). However,
influence on income of enterprise
(p<0.01) had a negative effect. Frequency of informal credit
access had a significant
positive influence on experience in borrowing (p<0.01)
and social capital (p<0.01), while
it had a significant negative influence on income of
enterprise (p<0.01) and non-agrobased
income (p<0.01). Frequency of formal credit access was
positively influenced by
education (p<0.10) and collateral (p<0.01), and
negatively influenced by interest amount
(p<0.01) and non-agro-based income (p<0.01).
Furthermore, income of enterprise
(p<0.01) had a significant positive effect on informal
credit default, whereas, gross profit
margin (p<0.01), interest amount (p<0.05) and shock
(p<0.01) had a significant negative
effect on informal credit default. Also, formal credit
default was negatively influenced by
gender (p<0.01), education (p<0.05), gross profit
margin (p<0.01) and shock (p<0.05).
There was a significant difference between mean return on
capital employed by
enterprises that borrowed from formal and informal credit
institutions, hence their
performances varied. It was recommended that Government and
development partners
in the region should realize these changing realities and
designed appropriate credit
packagesfor the enterprises in the region. This will go a
long way in complementing the
amnesty programme of the Federal Government of Nigeria in
the region.