Evaluation of Aquaculture Investment Returns Under Different Financing Models in Lagos State

This study evaluated the returns on aquaculture investment under three financing models, namely self-financing, microfinance loans, and commercial bank credit, among medium-scale fish farmers in Lagos State, South West Nigeria. Access to appropriate financing is widely recognised as a key determinant of aquaculture enterprise growth and sustainability in Nigeria, yet the relative performance of different financing models has not been rigorously compared in the Lagos context. Data were collected from 90 fish farming enterprises classified by their primary financing model. Financial performance indicators including return on investment, net present value, payback period, and internal rate of return were computed from detailed farm financial records covering two production cycles. Results showed that self-financed farms achieved the highest net return per cycle of 22 percent on average, benefiting from absence of debt servicing costs. However, their production scale was constrained by limited capital, resulting in lower absolute profits. Microfinance-supported farms showed intermediate returns, with interest rates averaging 28 percent per annum significantly reducing net profitability despite enabling larger production volumes. Commercial bank-financed farms reported the highest gross revenues but the lowest net margins, as annual interest rates of 22 to 30 percent consumed a disproportionate share of operating surplus. Farms with irregular production cycles, often caused by cash flow gaps, recorded 37 percent lower annual returns than those with continuous production. The study recommends the development of agriculture-specific low-interest credit products for aquaculture enterprises in Lagos State and improved financial management training for farm operators. Keywords: aquaculture investment, financing models, microfinance, return on investment, Lagos State