Willingness and capacity of borrowers for loan repayment among farmers in Delta State Nigeria

Willingness of borrowers to repay loan and their capacity to repay borrowed fund has been an enigmatic challenge in the financing of agricultural enterprises in the tropics. As it stands, there is lack of empirical information on willingness of borrowers to repay loan and their capacity to repay credit. Investigating this challenge will improve agriculture in Delta state, Nigeria. This study derives its significance from its implications and usability among credit institutions. This study investigates willingness and capacity of borrowers for credit repayment among farmers in Delta State, Nigeria. A multistage sampling approach was used to select 216 farmers, Descriptive statistics, multiple regression, and binary logistic regression were employed in the analysis of collected data. The findings of the study show a mean amount of ₦460,972.22 was borrowed and ₦253,268.52 was repaid with a loan repayment performance of 54.94% and loan default rate of 45.1%. Further result indicates that 56.5% of farmers express willingness to repay loans, while 43.5% show unwillingness to repay borrowed fund. Further finding reveals that 40% of the farmers possess capacity to repay loan.. The study revealed that there is a significant difference in loan repayment capacity of poultry< fish, < arable crop farmers, with an F-value of 5.669 and (P≤ 0.05). Regression analysis identifies significant predictors of loan repayment capacity to include stock size, off-farm income, and farm income. Diversified income sources and effective farm management practices play crucial roles. Logistic regression indicates that longer repayment periods, larger stock sizes, and greater farming experience positively influence farmers’ willingness to repay loans (P≤0.05). It was recommended among others that financial institutions should offering flexible loan terms and sizes according to borrowers capacity. Encouraging farmers to diversify their income sources can  improve loan repayment capacity of farmers.