An Empirical Analysis of Microcredit Repayment in Southwestern Nigeria

This paper provides empirical analysis of microcredit repayment in Southwestern Nigeria. Multi-stage stratified random sampling procedure was used to collect data from 200 members of microfinance institutions (MFIs) in the study area. Linear multiple regression was used to determine the variables that affected microcredit repayment. The mean weekly contribution of the members of microfinance nongovernmental organizations (NGOs) in groups was N = 772.62 and the mean borrowing was N = 23, 55.25 per annum. On the average, they pay 90 percent of their microcredit as at when due. The F-values indicated that the microcredit repayment model had good fit (p = 0.01) with an adjusted R-2 of phi.36. The variables that significantly influence repayment: income, distance between dwelling place and bank, amount of business investment, socio-cultural expenses, amount of loan borrowed, access to business information, penalty for lateness to group meetings, membership of cooperative society, number of days between loan application and disbursement and poverty indicator were analyzed. Poverty was found to hamper repayment. Nevertheless, the study supports findings that members of microfinance groups are creditworthy. The study concluded that belonging to microfinance institutions will improve the status of members.