THE ROLE OF COMMERCIAL BANKS IN FINANCING SMALL SCALE AGRICULTURAL (A CASE STUDY OF UDI, AWGU, EZIAGU AND ENUGU SOUTH)
The study was done to ascertain the role of commercial banks in financing small-scale agriculture in selected areas of enugu agricultural zone. The aim was to determine the extent to which commercial banks have given out loans for small scale agriculture in comparison with other source of credit, and to look into the problem faced by both the small holder farmers and the banks as regard credit flow to farmers. The problems of loans repayment and reasons for loan default were also taken into consideration in this study. Information was gathered through questionnaire and personal interviews. It was gathered b from the result that the small scale formers have not benefit to any noticeable extent from commercial banks credit accommodation in the bid to improved their farms. The study also indicated that rigorous procedures and complexity of loans farms were some of the factors that vitiate and reduce the access of small farmers to credit. In addition, it was gather that the inducement to ask for credit facilities by the small scale farmers from commercial bank died down due to the level of collate red requirement, viability of the scheme form which the loan was to be granted, the tag that the beneficiary in most cases must be a corporation or a limited liability company, other problem the small scale farmers envisaged as regard being accommodated by commercial banks or other financial institutions includes in a nutshell, illiteracy, ignorance, small size of farm holdings, little capital, lack of tangible assets and clear little of land low level of productivity, low income, little or no saving, interest rate paid, and economic condition in general. The importance of these finding were also indicated. In particular so long as the current practice of subjecting the farmer to some vigous procedure and task to overcome before granting the credit, it will be unrealistic to expect credit programmers to benefit small scale farmers and suggest the need for policies designed to accommodated these limitation. Finally, it was suggested that channeling credit through farmer’s co-operatives would conderably strengthen the risk of loan default.
In Nigeria, agricultural like in most other developing countries the small scale farmer predominates several constraint and barriers which appear insurmountable limited the overall farming activities and if this is anything to go by, it can destroy a developing economy which heavily rest on the shoulders of small scale farmer. These small scale farmer are characterized by illiteracy, ignorance, small size of farm holding, little capital, lack of tangible asset and tenure system, low level of technology, low level of productivity, low level income, and general rural milieu. These features combined together makes the services of formal source of finance difficult to the small farmer.