An evaluation of farmer credit utilization in rural agricultural banking: a case study of Stanbic IBTC Bank Nigeria
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Background of the Study
Farmers in rural Nigeria rely heavily on credit facilities to finance their agricultural activities—from purchasing inputs to managing seasonal cash flows. Stanbic IBTC Bank Nigeria, recognized for its strong presence in rural financial markets, plays a pivotal role in facilitating credit access for these farmers. Recent studies have indicated that despite the availability of credit, utilization rates among rural farmers remain inconsistent, largely due to factors such as low financial literacy, complex loan application processes, and inadequate risk assessment protocols (Ajayi, 2023; Musa, 2024).
The evolving financial landscape, influenced by reforms and technological innovations, has the potential to transform how farmers engage with credit products. Credit utilization among farmers is not merely a reflection of access but also of the effective use of funds to enhance productivity and yield. Over the period 2023 to 2025, Stanbic IBTC Bank Nigeria has implemented several initiatives aimed at simplifying credit application procedures and improving outreach through targeted financial literacy programs (Obi, 2023). These initiatives have been complemented by the integration of digital platforms that facilitate easier monitoring and management of credit facilities (Ike, 2025).
Despite these advancements, disparities persist. Rural farmers often encounter bureaucratic bottlenecks and stringent collateral requirements, which may lead to underutilization of available credit. Furthermore, the mismatch between the credit products offered by banks and the actual financial needs of farmers creates a gap in the efficient utilization of loans (Chinwe, 2024). This study, therefore, seeks to evaluate the extent to which credit facilities are being effectively utilized by rural farmers, using Stanbic IBTC Bank Nigeria as a case study. It will assess the factors that influence credit utilization and examine whether the bank’s efforts have translated into improved financial outcomes for the agricultural sector (Akinwale, 2025).
By investigating these dynamics, the research aims to uncover both the successes and challenges in the current credit system. The findings are expected to provide valuable insights for both banking institutions and policymakers, highlighting areas where targeted interventions can enhance the impact of credit facilities on rural agricultural productivity (Okafor, 2023). The study will employ both quantitative data analysis and qualitative assessments to ensure a comprehensive evaluation of credit utilization patterns and their implications for rural economic development.
Statement of the Problem :
Although Stanbic IBTC Bank Nigeria has made significant strides in expanding credit facilities to rural farmers, the effective utilization of these credits remains problematic. Many farmers, despite obtaining loans, fail to fully leverage these funds to boost their agricultural productivity. This underutilization is compounded by a lack of tailored financial products that address the specific seasonal and operational needs of smallholder farmers. As a result, the intended impact of credit facilities on increasing farm output and income is not fully realized (Eze, 2023).
There exists a notable disconnect between the design of credit products and the practical requirements of rural farmers. Complicated application processes, coupled with insufficient financial literacy, leave many farmers either unaware of or unable to maximize the benefits of available credit (Umeh, 2024). Furthermore, the risk assessment criteria employed by the bank often do not account for the unique challenges of agricultural production, resulting in either overly cautious lending or misallocation of funds. The resultant low credit utilization not only limits the economic empowerment of farmers but also affects the bank’s portfolio performance, increasing the likelihood of non-performing loans (Balogun, 2025).
Moreover, while digital innovations have been introduced to simplify access, the adoption rate among rural farmers remains slow due to infrastructural limitations and mistrust of digital financial services. This study, therefore, seeks to address these challenges by evaluating the factors that hinder effective credit utilization among rural farmers and assessing the impact of current credit products on agricultural productivity. The research aims to fill the knowledge gap by providing empirical evidence on the link between credit utilization and agricultural performance, thereby offering insights for refining credit delivery mechanisms and improving farmer outcomes (Ogun, 2023).
Objectives of the Study:
- To evaluate the current rate of credit utilization among rural farmers accessing loans from Stanbic IBTC Bank Nigeria.
- To identify key factors influencing the underutilization of credit facilities in rural agricultural contexts.
- To propose recommendations for tailoring credit products to better meet the needs of rural farmers.
Research Questions:
- What is the current rate of credit utilization among rural farmers using Stanbic IBTC Bank Nigeria’s loan products?
- Which factors significantly impede the effective utilization of credit in rural agricultural settings?
- How can credit products be modified to enhance their impact on rural agricultural productivity?
Research Hypotheses:
- H1: There is a significant relationship between financial literacy levels and the effective utilization of credit among rural farmers.
- H2: Complex loan application processes negatively affect credit utilization rates among rural farmers.
- H3: Tailored credit products that address seasonal agricultural needs will lead to higher utilization rates.
Scope and Limitations of the Study:
This study focuses on the credit utilization patterns among rural farmers who have accessed credit from Stanbic IBTC Bank Nigeria over the period 2023–2025. It examines factors such as financial literacy, application processes, and product design. Limitations include potential biases in self-reported data and the challenge of isolating external economic factors that may influence credit usage.
Definitions of Terms:
- Credit Utilization: The extent to which available loan funds are used productively by borrowers.
- Rural Agricultural Banking: Banking services specifically designed for the agricultural sector in rural areas.
- Financial Literacy: The ability to understand and effectively use various financial skills, including personal financial management.
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