Authors : Emmanuel O. Eyo , Judith E. Otu and Maddy G. Sampson
Abstract: The program of lending to farmers in groups in the formal-informal sector linkage introduced in Nigeria to boost lending to the agricultural sector under the Agricultural Credit Guarantee Fund Scheme has not been all success. In fact, group lending has been problematic since its inception, particular in the area of loan recovery. As the lenders continue to search for a satisfactory approach of ensuring satisfactory level of loan recovery this study assesses how homogeneity in social characteristics of group members relates with loan recovery among informal finance groups. The result shows that the self-help groups were heterogeneous in membership social characteristics. Loan recovery was not significantly affected by homogeneity in membership social characteristics instead; the amount of loans recovered was proportional to the amount of loans disbursed. However, loan repayment was generally better for young group members; members with small family size and those who spent few years to obtain formal education. Invariably, loan recovery would greatly be enhanced if group loan schemes embrace groups with younger and economically active members, members with small family size, members who spend fewer years to obtain formal education. Such groups must have existed for a sufficiently long duration and must have a manageable size.
Emmanuel O. Eyo , Judith E. Otu and Maddy G. Sampson , 2008. Homogeneity in Group Membership Social Characteristics and Loan Recovery: Implications for Success of Formal-Informal Sector Linkage in Akwa Ibom State, Nigeria. The Social Sciences, 3: 17-22.