By Iheanacho, Andrew Chikaodi
This study analysed the agricultural credit
recovery strategies of the major lending agencies in
Imo State. The objective was to identify the credit
recovery and default prevention strategy of the major
formal and informal lending agencies and to asbess
their effectiveness. It also examined reasons for
default and criteria for choice of recovery strategies,
making recommendations based on the findings.
Data were obtained through questionnaire
administered to four formal and six informal lending
agencies. A sample of $2@ farmers, made up of 90 creiit
beneficiaries and 30 non-beneficiaries, drawn from th.ree
~agcicultural zones of Imo State, Owerri, Orlu and Okiqwe
werc also inteviewed. Multiple regression : technique was
used to analyse the data.
Our analysis showed that the use of arbiteration
panel/task force was the most effective credit recovery
strategy for the formal lenders; while holding guarantors/
surety responsible ranked first among the informal
lenders. Other loan recovery strategies used by the
lending agencies include court action, sale of defaulters'
collaterals, purchase of defaulters1 farm produce, report
ar
debtors to the village heads/thlefr or ~.LIgLous groups
or any other traditionat o~ganisations to which
defaulters belonged to effect gecovery,
Credit disbursement through carpate bodies such
as cooperatives and demand for guarantors were the most
effective default prevention strategies for the formal
and informal lenders respectively* Other prevention
strategies used were demand for collaterals, assessment
of investment v i a b i l i t y and profitability, threat of
court action, provision of managerial and supervision
services, and prior knowledge of borrowers1 credit
worthiness and reputation.