Cassava Value Chain Commercialisation in Nigeria: How Effective and Efficient are Financial Institutions?

Financial institutions (FIs) have key roles to play in the facilitation of value chain commercialisation for better earnings and improved food security. However, their performances with respect to cassava in which Nigeria is well-placed, has not been properly assessed. This study fills the gap by using a sample of fifty-four (54) FIs across selected states in Nigeria to examine the efficiency and effectiveness with which FIs provide credit to value chain actors and the determinants of FI use. Three (3) performance indicators were used to rank the FIs, namely Credit Effectiveness Index (CEI), Loan Performance Index (LPI) and Repayment Efficiency Index (REI). The study found out that out of the performance indicators, CEI had the highest value (0.8832) showing that the FIs performed best in loan coverage. Disaggregating by institution types, government-owned bank had highest CEI, followed by microfinance bank. Commercial bank led with respect to LPI and Repayment Efficiency Index (REI) which means it was the most successful in recouping credit given to cassava actors. This was also reflected in the Average Performance (AP) in which commercial bank led (0.9387) followed by microfinance bank (0.8272). The proportion of FI clients that are into agriculture and interest rate were the factors determining institution use. Government should continue to work with commercial banks through the various public sector credit schemes and strengthen the microfinance institutions as alternatives, in its quest for better credit.