Determinants of Constraints to Credit Access among Cocoa Farming Households in Osun State, Nigeria

Access to credit is a major problem facing the rural farmers while, credit constraints affect farmers investment behaviors, productivity and expansion of farms negatively. Now in Nigeria, the cocoa farming households can only access adequate credit with acceptable real estate collaterals, which most of the farming households lack. However, for the dearth of information regarding the effects of social capital on constraint to credit access among cocoa farmers in Osun State, Nigeria. This study therefore, examined the determinants of Credit Constraints (CC) and also ranked the constraints identified by the Cocoa Farming Households (CFHs) in the study area. Primary data were collected from 150 randomly selected CFHs from the two cocoa producing Agricultural Development Project (ADP) zones with the aid of well structured questionnaire using multistage sampling procedure. Data collected include socio-economic, social capital and credit characteristics. Analysis was done using descriptive statistics, social capital indices and censored Tobit regression model. Social Capital (SC) index was 25.81% indicating low level of SC among the CFHs. Also, unit increases in request for collaterals and gender of household head increases (p<0.05) CC by 83.03 and 195.82%, respectively for the CFH while, units increases in educational status, years of experience, presence of savings and decision making index (index of participation) in association reduces (p<0.05) CC by 6.76, 4.61, 173.62 and 2.71%, respectively. The study conclude that social capital although low now among the cocoa farming households, if improved will go a long way to reduce their constraints to credit access.