Pattern of Informal Financial Institutions' Patronage by Rural Farmers in Kwara State, Nigeria
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Date
2011
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Department of Business Administration, Ibrahim Badamasi Babangida University, Lapai, Niger State
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 indentify the nature and extent of patronage of informal agricultural financing institutions 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 the sampled 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 selected for the study. The returned 1,249 copies of questionnaire were then processed using descriptive statistics. The findings indicated that the farmers patronized and used the three sources of finance with periodic savings (595) and rotating savings (421) being the widely patronized. The least patronized was money lender by 60 respondents. 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, the periodic savings. with a view to increasing the membership drive of all the informal institutions.
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Keywords
Informal financing, Financial Institutions, Rural Farmers