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Financial Savings and Capital Formation among Rural Farmers in Abia State, Nigeria

B. A. Ahamefule
U. R. Oke
N. G. Nnamani
K. O. Ezeugo


Rural farmers require enhanced savings mobilization and capital accumulation to increase the loanable funds available in rural banks and for farming. This study analyzed the factors affecting savings and capital formation among rural farmers in Umuahia South Local Government Area of Abia State, Nigeria. A multi-stage random sample technique was employed in the selection of 96 respondents. Data were collected using structured questionnaires and were analyzed using descriptive and inferential statistics. Results showed that the majority of the respondents were males who are still strong and agile, with large household sizes and small farm sizes. The result equally indicated that all the respondents had different reasons for engaging in saving with the majority saving with the Commercial Banks. The important determinants of saving and capital formation included age, farm income, education, non-farm income, gender, and farming and savings experience at the 10%, 1%, 10%, 10%, 10%, and 5% levels of significance respectively. Also, delay in credit disbursement, the low future value of savings and low- interest rates charged on savings of bank account holders were among the major constraints. It is therefore recommended that government should empower financial institutions to provide favourable incentives which would motivate farmers to save. In addition, there should be a timely extension of micro-credit to rural farmers to enhance their production capability and enable them to have a surplus for savings and capital formation.