CREDIT ACCESS AND THE PERFORMANCE OF SMALL SCALE AGROBASED ENTERPRISES IN THE NIGER DELTA REGION OF NIGERIA

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).