The Effect of Agricultural Credit Schemes on Smallholder Farmer Productivity in Enugu State: Evidence from the UNN Agricultural Zone

Access to agricultural credit remains a critical constraint on smallholder farmer productivity across sub-Saharan Africa, and Enugu State is no exception to this broader challenge. This study examines the effect of agricultural credit schemes on smallholder farmer productivity within communities surrounding the University of Nigeria, Nsukka (UNN) agricultural zone, focusing on formal and informal credit channels available between 2020 and 2024. The study is anchored on the Financial Intermediation Theory, which posits that efficient credit allocation enhances productive capacity by bridging resource gaps among low-income farmers. A cross-sectional survey research design was adopted, with a target population comprising 1,200 registered smallholder farmers in four local government areas of Enugu State. Using the Taro Yamane formula, a sample size of 300 respondents was selected through stratified random sampling. A structured questionnaire validated by agricultural economists served as the primary data collection instrument. Findings reveal that access to government-backed credit schemes significantly increased farm output by approximately 34 percent among beneficiaries relative to non-beneficiaries. However, high collateral requirements, bureaucratic bottlenecks, and low financial literacy among farmers remain major impediments to effective credit utilization. The study concludes that while agricultural credit schemes hold considerable promise for boosting rural productivity, their design must be made more farmer-inclusive. It is therefore recommended that policymakers simplify credit application processes and integrate financial literacy programs into rural agricultural extension services in Enugu State.

Keywords: Agricultural credit, smallholder farmers, productivity, financial intermediation, Enugu State