Evaluation Of Selected Commercial Banks Financing Of Agro Based Enterprises In Ikot Ekpene LGA Of Akwa Ibom State, Nigeria

Abstract

This study was an evaluation of selected Commercial Banks Financing of Agro-based Enterprises in Ikot Ekpene L.G.A. of Akwa Ibom State, Nigeria. The study area was purposively chosen because of the existence of agro-based enterprises and commercial banks that lend to these business. The objectives of the study included; identifying the limitations and problems of the agro-based enterprises and the banks respectively and the determination of the amount of loan disbursed to the agro-based enterprises and rates of repayment. The data were analysed using percentages, means and frequency distribution. The result showed that the agro-based enterprises are faced with the problems of insufficient collateral, high interest rate and poor documentation while the banks are faced with the problems of loan diversion, irregular loan repayment and none presentation of perfectible collaterals by loan beneficiaries. Commercial banks are influenced by the type of collateral presented by the loan beneficiaries, their scale of operation, profitability of the enterprise, past repayment record of the loanee and integrity. The average repayment rate was found to be 71.92% while the banks were able to finance only 31.54% of the loan amount applied for by the agro-based enterprises. There is therefore the need for agro-based enterprises to keep proper records of their activities and form cooperatives for easy access to bank funding. Banks should have effective and efficient loan monitoring and supervision departments to prevent loan diversion and default.

Keywords: Commercial Banks, Financing, Agro-Based Enterprises

International Journal of Agriculture and Development Vol. 9 2007: pp. 62-66