An evaluation of rural financial management practices in agricultural sectors: a case study of United Bank for Africa
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Background of the Study
Effective financial management practices in rural agriculture are critical to ensuring the sustainability of lending operations and the economic development of farming communities. United Bank for Africa (UBA) has implemented a range of financial management practices tailored to the unique challenges of rural agriculture, including budgeting workshops, credit management training, and digital financial tracking tools (Oluseyi, 2023). These initiatives are designed to empower rural farmers to better manage their finances, optimize cash flow, and make informed decisions regarding investments and loan repayments. By promoting sound financial practices, UBA aims to reduce default rates, improve loan performance, and foster a culture of financial discipline among rural borrowers.
UBA’s approach integrates both traditional and digital financial management techniques, enabling farmers to access real-time information and track their financial performance. This holistic strategy not only supports individual farm management but also contributes to the overall stability of the bank’s agricultural loan portfolio. In addition, the bank collaborates with local agricultural extension services and financial literacy organizations to enhance the reach and effectiveness of these programs (Akinola, 2024). However, challenges remain due to low baseline financial literacy, limited access to digital tools, and external factors such as market volatility and climatic disruptions (Ibrahim, 2025). This study examines rural financial management practices within the agricultural sector and evaluates their impact on the performance of UBA’s rural lending operations.
Statement of the Problem
Despite efforts to promote effective financial management among rural farmers, UBA faces persistent challenges in achieving optimal loan performance. Many rural borrowers lack the foundational financial knowledge required to manage credit effectively, resulting in poor budgeting practices and inconsistent repayment behavior (Oluseyi, 2023). Additionally, limited access to digital financial tools and resources in remote areas hinders farmers’ ability to monitor and adjust their financial plans. External pressures such as fluctuating commodity prices, adverse weather, and market instability further complicate financial management efforts. These factors contribute to high default rates and reduced loan sustainability, undermining the bank’s goal of achieving financial inclusion and agricultural growth (Akinola, 2024). The study seeks to identify the critical barriers to effective financial management in rural agricultural sectors and propose strategies to enhance these practices, thereby improving overall rural banking performance (Ibrahim, 2025).
Objectives of the Study
• To assess current financial management practices among rural agricultural borrowers.
• To identify challenges that impede effective credit management.
• To recommend strategies for enhancing financial management and loan performance.
Research Questions
• What financial management practices are currently adopted by rural farmers?
• What barriers limit effective credit management in rural agricultural sectors?
• How can financial management practices be improved to support better loan performance?
Research Hypotheses
• H1: Effective financial management practices significantly improve loan repayment performance.
• H2: Limited digital tool access negatively affects financial management outcomes.
• H3: Enhanced financial training programs improve credit management among rural farmers.
Scope and Limitations of the Study
This study focuses on UBA’s agricultural loan portfolio in selected rural regions. Data are collected from borrower surveys, financial records, and training program evaluations. Limitations include regional economic variations and potential self-reporting bias.
Definitions of Terms
• Financial Management Practices: Strategies and methods used to plan, control, and monitor financial resources.
• Agricultural Sectors: Industries involved in farming and food production.
• Credit Management: The process of handling borrowed funds to ensure timely repayment.
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