Remedying Factors Associated with Credit Mismanagement among Rural Dwellers

Abstract

This study identified kinds/forms and the sources of credit facilities available to respondents; investigated the level of knowledge of respondents about credit management; and identified the causes of credit mismanagement among rural dwellers. The study was conducted in rural communities of Akure South Local Government Area (LGA), Ondo State, Nigeria. Two hundred and forty rural dwellers who were involved in one business or the other were interviewed with a structured and pre-tested interview schedule using snow ball sampling procedure. Collected data were summarized with descriptive statistical tools while correlation analysis was used to make inferences. The results revealed that most of the respondents (96.7%) traded with credit, 95.8 percent of these beneficiaries took credit mainly for business investments and 72.5 percent actually spent the credit on their businesses. Furthermore, 40 percent of the respondents never planned the use of credit and 27.5 percent never paid back as agreed. Factors that predisposed credit beneficiaries to mismanaging credit include deviation from plan (90.0%), spending for other purposes (89.2%), extending payment period (85.0%), lack of financial discipline (80.0%) and mis-prioritization (77.5%) among others. There was a significant relationship between organizational participation (r = 0.323) and credit mismanagement. Also, there was no significant relationship between knowledge about credit management (r = 0.114), sources of credit (r = 0.170) and credit mismanagement. Credit beneficiaries should imbibe the culture of financial discipline to minimise possibilities of credit mismanagement to a large extent.

DOI: 10.5901/mjss.2015.v6n4s2p11