ABSTRACT
The study examined farmers access to microcredit and
resource use efficiency in Ekiti State Sponsored microcredit financing scheme,
Nigeria. The objectives of the study were to examine the influence of
socio-economic characteristic on amount of loan accessed, determine the volume
of loans demanded, received and repaid on gender basis, ascertain the
constraints in accessing the loans as well as repayment of loan, access the
determinants of farmers’ access to microcredit in Ekiti State Multipurpose
Credit Agency, and determine resource use efficiency of those who accessed
credit and those that did not access credit. Primary data were generated with
structured questionnaire schedule that were administered to one hundred and
sixty (160) respondents drawn through a simple random sampling technique
(procedure), but one hundred and thirty two (132) responses were utilized for
the study. Descriptive statistics such as mean, mode, gross margin, analysis of
resource use efficiency and a five point likert scale were used to analyze the
data, while logitic regression model was used to analyze the determinants of
farmers’ access to microcredit in Ekiti State Multipurpose Credit Agency.
Findings of the study showed that more than 67.4% of the responses were men,
with a mean age bracket of 46years of age while 95.4% had formal education,
with a mean family size of 5 persons per household. About 67.4% of the
respondents were married, while 47% had farm size ranging between 0.6 and 1
hectares. 47.7% of the farmers obtained their credit from Ekiti State
Multipurpose Credit Scheme, five of the variables examined had significant
effects on the demand for micro-credit. These are age, gender, level of
education, interest rate and previous loan amount. High interest rate, delay in
disbursement, lack of awareness of loan package, family responsibility and poor
product prices were identified as serious constraints to credit access and
repayment in Ekiti State Multi-purpose Credit Agency. Farmers were inefficient
in resource utilization; land and capital were under-utilized, while labour was
over-utilized. We recommend the need to increase the level of awareness of
microcredit financing scheme and enlighten beneficiary of micro-credit to
increase their production efficiency, which will enable them to make optimum
use of such facilities.
CHAPTER ONE
INTRODUCTION
1.1
Background Information On Microcredit And Finance
Micro-credit has been identified and recognized by
governments and development experts as the main engine of economic growth and a
major factor in promoting agricultural development. It has been recognized that
availability of capital on affordable terms is vital to efforts aimed at
enhancing income generating capacity of the poor local farmers
The assumption is that the farmers know what to do to
improve their socio-economic conditions and what is required is credits, a
critical factor of agricultural production. It is also believed that the
structures, operational procedures and policies of formal and informal
financial operations constrain the flow of credit to micro, small and medium
scale enterprises. Demand for tangible collateral, extensive documentation and
cumbersome procedures are often identified as the limiting features of these
financial markets. Micro finance in practice addresses these limitations.
The micro finance industry began in 1976 with the
establishment of the Grameen Bank in Bangladesh and it is now a world wide
movement comprising thousands of specialist banks, credit unions, cooperatives,
village credit societies, NGO’s and charities in both the rich and poor countries.
The common goal was to extend the outreach of banking services, especially
business credit to those not qualified for normal bank loans. Micro credit was
granted at commercial interest rates, though at a much lower rate than charged
by informal money lenders. This reflects the status of micro finance
institutions as non-profit making but being able to become fully self
supporting after a number of years (Grameen Bank, 1999).
In Nigeria, micro finance is not a new phenomenum. Various
communities have rich and long history of financial arrangements with huge
savings components. Rotating savings and credit schemes have been organized in
various communities under different names. The period between 1930 and 1980
witnessed vibrant micro finance practice within the structure and principles of
the cooperative movement. The transformation of the state-promoted cooperative
banks to commercial banks was substantially responsible for the decline in
cooperative savings and credit actives.
Non-governmental organizations (NGOs) emerged in the era of
financial liberalization which was an important component of the structural
adjustment programme introduced in 1986. These institutions were mainly poverty
alleviation institutions. The non-governmental initiatives were supported by
donor agencies with the Ford foundation at the fore-front. The major NGOs that
emerged are Farmers Development Union (FADU), Lift Above Poverty Organization
(LAPO), Country Women Association Of
Nigeria (COWAN) and Community Women and Development (COWAD). (Olomola,
1999).
Government has been a key actor in the micro finance
sub-sector in Nigeria. Starting from agricultural financial with the
Agricultural Credit Guarantee Scheme in the 1970s, government involvement was
broadened to micro enterprises finance with the establishment of the People’s
Bank of Nigeria Limited and the Community Banks. The roles played by the
agricultural sector includes: provision of food for an increasing population,
supply of adequate raw-materials to a growing industrial sector, a major source
of employment and foreign exchange earnings.
The contributions of agriculture are expected to increase
rapidly if credit is made available to farmers through the micro-credit and
finance institutions in Nigeria (Olomola and Akande 1999). Ijewere(2013) noted
that there is need for Nigerians to embrace Agricultural Transformation
Agenda(ATA) of the federal government of Nigeria. He asserted that Nigerians
need to re-orientate themselves and transform from the traditional system of Agriculture.
It is that transformation that will replace Agriculture as we knew it and
replace it with Agribusiness tied to value chain where the person providing the
high yielding seed is as important as the bank providing the microfinance.