Social Capital and Access to Credit among Cassava Farming households in Ogun State, Nigeria

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Social Capital and Access to Credit among Cassava Farming households in Ogun State, Nigeria is a well-researched topic, it is to be used as a guide or framework for your Academic Research.

Abstract

The Nigerian Government Agriculture Transformation Agenda (ATA) has its core thrust in increased cassava production for economic development. However, past efforts were bedeviled by constraints amongst which access to credit is chief; hence, this study examined the effect of social capital on access to credit among cassava farming households (CFCs) in Ogun State, Nigeria. One hundred and twenty CFHs
were surveyed using a multi-stage sampling technique. Analyses included descriptive statistics and regression techniques. Social capital dimensions considered are density of membership index, cash contribution index, labor index, decision-making index, meeting attendance index, and heterogeneity index and the obtained indices were 49.5%, 35.5%, 51%, 57.3%, 55.1%, and 48.3% respectively. Some 44.2% and 35% of respondents sourced capital from personal savings and rotating savings & credit associations respectively, and the mean credit granted represented 45.5% of CFHs’ credit needs. Logistic regression analysis of access to credit revealed that increasing values of decision-making index, age, and payback period correspond to increasing odds of having access to credit. Conversely, increasing values of heterogeneity index and household size correspond to decreasing odds of having access to credit. Policy directed at investment in social capital development that enhances access to credit is recommended.

Introduction

In developing countries, social capital has increasingly gained recognition in many aspects of agriculture, natural resource management, and rural development. This is due to its perceived positive consequences for development and opportunity for those who lack possession of and access to financial, human, or natural capital
(Meinzen-Dick, DiGregorio & McCarthy, 2004). There is increasing recognition that differences in economic outcomes, whether at the level of individual, household, or state; cannot be fully explained by
differences in traditional inputs such as land, labor, and physical capital. According to Serageldin (1996), the traditional composition of capital (i.e., natural, physical, and human capital) needs to be expanded to include social capital for sustainable development. Evidence is also mounting that social capital is an element of sustainable development (Lawal, Omonona, Ajani & Oni, 2009). The debate on social capital has thus brought together sociologists, anthropologists, political scientists and economists. While differences remain, there is an agreement that, in contrast to all other concepts of a capital central to the development debate, social capital is unique in that it is relational (Liu & Spanjers, 2009). In industrialized economies, households generally obtain credit, against individual guarantees, from commercial sources that arrive at loan decisions based on readily available information on borrowers’ credit risk. However, in most developing economies poor households often do not have access to the guarantee mechanisms, such as non-real estate-based collateral. This situation, combined with the overall lack
of information about potential borrowers’ creditworthiness, contributes to a virtual exclusion of this group of borrowers from formal credit markets (Bastelaer, 2000). Credit for rural smallholders, particularly in agriculture is assuming increasing importance in many parts of the world in response to the needs of less privileged entrepreneurs with limited capital base in the sector (Lawal et al., 2009; Chloupkova & Bjønskov, 2001). To use improved inputs and adopt new technology, farmers
require credits. According to Iqbal, Ahmad & Abbas (2003), in developing economies, especially in Nigeria, savings among small farmers are of negligible amount and agricultural credit appears as an essential input for investment in agriculture. Von Pischke & Adams (1980) asserted that credit is an important resource in the further expansion of farm business to which poor rural households in developing countries lack adequate access.

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Additional information

Type

Project Topic and Material

Category

Agricultural Economics

No of Chapters

5

Reference

Yes

Format

PDF

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