Examining the Effect of Bank of Industry Lending on the Performance of Smallholder- Rice Farmers in a Selected State in Nigeria

Abstract

Abstract Although the existing literature is replete with studies assessing the effects of banks’ lending on the growth of micro, small, and medium enterprises (MSMEs) in Nigeria, the impact of Bank of Industry (BOI) lending on the growth of MSMEs has not been well established. The primary objective of this study was to examine whether the BOI credits played an important role in promoting smallholder-rice farming in Ayamelum LGA of Anambra State, Nigeria. This objective is synergized with the Sustainable Development Goals (SDGs), particularly the SDG-8, which focuses on the achievement of decent work and economic growth. The study adopted survey design, using the Taro Yamane formula 1967 to arrive at a sample size of 60, which was derived from the population of 70 clusters of smallholder-rice farmers. The purposive sampling technique was used to administer questionnaires and interviews, which were analyzed using descriptive statistics and qualitative descriptive methods. The results showed that the BOI micro-enterprise lending scheme did not enhance the performance of smallholder-rice farmers in Ayamelum LGA. This is because 94% of the respondents believed that the BOI did not support them and were faced with limitations of information and knowledge on the operations of the bank. The results of this research were compared with the findings of some related empirical studies. While some findings agreed with the results of this study, others were contrary. This shows that while the BOI enterprise financing is considered effective in some locations and businesses, contrasting outcomes were recorded in other locations and businesses in Nigeria. Factors such as the lack of information and knowledge regarding the BOI loan terms and support services among the rice farmers in Ayamelum LGA have been noted in this study. This has undermined the ability of rice farmers in the LGA to benefit from the BOI value chain, thereby impeding their productivity levels. Arising from the major findings, the study recommends, among others, that there is a need for the BOI to increase awareness creation regarding its operations among the rice farmers in Ayamelum LGA. This could be achieved by organizing seminars and workshops for the rice farmers, in order to educate them on the BOI loan terms as well as the measures to ensure prudent management of business funds. JEL Classification Codes : E51, H81, L32, Q12, N1.