ABSTRACT
The study examined income,
savings and investment patterns of small-scale agro-based entrepreneurs in
Anambra State. The study utilized primary data to achieve this objective. The
data were collected through multi-stage random sampling technique from 160
respondents. These data were analyzed with descriptive statistics including
4-point Likert rating scale, and multiple regressions. Tests of significant
effects and differences were carried out with t-test and analysis of variance
(ANOVA) techniques. Research results indicated that the average age of the
small-scale agro-based entrepreneurs were 40years, while majority (33.8%) of
them fell within the age range of 31-40 years. Also, majority (57.5%) of the
small-scale agro-based entrepreneurs were males, while 43.8% of them were married.
Household size of six to ten persons was the highest at 41.3% with an average
of 9 persons per household, while twenty five percent of the agro-based
entrepreneurs had completed their primary school education. Furthermore,
majority (26.9%) of the entrepreneurs were engaged in groundnut processing,
while the average experience of the entrepreneurs was 9 years and majority
(38.1%) of them had 6 – 10 years of experience. Further results showed that the
average monthly income of the small-scale agro-based entrepreneurs was
N12,031.25 while their average monthly savings was N4,550.00. Majority (58.3%)
of the small-scale agro-based entrepreneurs saved with esusu. Further results
showed that majority (46.3%) of the entrepreneurs invested within N21,000 – N30,000
in their businesses while 46.3% of them also sourced their investment capital
through personal savings with only 2.5% of them receiving loans from bank to
finance their investments. There were no significant (p>0.1) differences in
investment pattern of the agro-based entrepreneurs across the agricultural
zones. Furthermore, the results showed that the socio-economic characteristics
were significant (p<0.1) in explaining the changes in income, savings and
investment patterns of the agro-based entrepreneurs. Age, educational level,
savings level, asset level and level of skill acquired were positive and
significant (p<0.05) in affecting the income pattern of the agro-based
entrepreneurs. Also, the savings level of the entrepreneurs were positively and
significantly (p<0.01) affected by their income and asset levels, and level
of skill acquired, while the effects of household size and educational level
were negative and significant (p<0.05). Furthermore, educational level,
level of skill acquired, savings level and amount of money borrowed by the
entrepreneurs had positive and significant (p<0.05) relationship with their
investment pattern while the effects of household size and amount of interest
paid on borrowed money were negative and significant (p<0.05). Further
results showed that the challenges facing small-scale agro-industry were at an
average of 2.85 on a 4-point Likert rating scale. These challenges included
erratic power supply, lack of accessibility to their business areas, multiple
government taxation and low patronage. The study recommended policies that will
enhance the income, savings and investment levels of small-scale agro-based
entrepreneurs in Anambra State.
TABLE OF CONTENTS
Title Page
i
Certification
ii
Dedication
iii
Acknowledgement
iv
Abstract
v
Table of
Contents
vi
List of Tables
x
List of Figures
xi
Chapter One:
Introduction
1.1 Background of the Study 1
1.2 Problem Statement
4
1.3 Objectives of the Study
6
1.4 Hypotheses of the Study
7
1.5 Justification of the Study
7
Chapter Two: Review of Related Literature
2.1 Concept of Small-Scale Agro Based
Entrepreneurs 9
2.1.1 Meaning of Small Scale
Industries/Enterprises 11
2.1.2 Roles of Small-Scale Agro-Based
Entrepreneurs in Economic Development
12
2.2 Socio-Economic Characteristics of
Small-Scale Agro-Based Entrepreneurs 13
2.2.1 Gender of Small-Scale Agro-Based
Entrepreneurs 14
2.2.2 Age of Small-Scale Agro-Based
Entrepreneurs 14
2.2.3 Education Level of Small-Scale Agro-Based
Entrepreneurs 14
2.2.4 Marital Status of Small-Scale Agro-Based
Entrepreneurs 15
2.2.5 Occupational Categories of Small-Scale
Agro-Based Entrepreneurs 15
2.2.5 Income Level of Small-Scale Agro-Based
Entrepreneurs 16
2.3 Sources of Capital/Funds for Investment
by Small-Scale Agro-Based Entrepreneurs
16
2.4 Patterns of Investment and Savings of
Small-Scale Agro-Based Entrepreneurs 18
2.4.1 Patterns of Investment of Small-Scale
Agro-Based Entrepreneurs 18
2.4.2 Patterns of Savings of Small-Scale
Agro-Based Entrepreneurs 19
2.5 Factors Affecting Income, Savings and
Investment Patterns of Agro-Based Entrepreneurs
20
2.6 Factors Affecting the Income of
Small-Scale Agro-Based Industry 22
2.7 Theoretical Framework
27
2.7.1 Life Cycle Hypothesis
27
2.7.2 Permanent Income Hypothesis 28
2.7.3 Keynesian and Accelerator Theories
30
2.8 Analytical Framework
30
2.8.1 Likert Scale 31
2.8.2 Multiple Regression
31
2.8.3 Analysis of Variance (ANOVA)
32
2.8.4 T- Test
32
Chapter Three: Research Methodology
3.1 Area of Study
33
3.2 Sampling Technique
34
3.3 Data Collection
34
3.4 Analytical Technique
35
Chapter Four: Results and
Discussions
4.1 Socio-Economic Characteristics of Small
Scale Agro Based Entrepreneurs 39
4.1.1 Age of Small-Scale Agro-Based
Entrepreneurs 39
4.1.2 Sex of Small-Scale Agro-Based
Entrepreneurs 40
4.1.3 Marital Status of Small-Scale Agro-Based
Entrepreneurs 40
4.1.4 Household Size of Small-Scale Agro-Based
Entrepreneurs 41
4.1.5 Educational Level of Small-Scale Agro-Based
Entrepreneurs 42
4.1.6 Type of Agro-Based Activity Engaged by
Small-Scale Agro-Based Entrepreneurs
43
4.1.7 Nature of Business of Small-Scale
Agro-Based Entrepreneurs44
4.1.8 Years of Experience of Small-Scale
Agro-Based Entrepreneurs 44
4.1.9 Possession of Requisite Skills by
Small-Scale Agro-Based Entrepreneurs
45
4.2 Income and Savings Status and Patterns
of Small-Scale Agro-Based Entrepreneurs 46
4.2.1 Income Status of Agro Based
Entrepreneurs 46
4.2.2 Income Sources of Small-Scale Agro-Based
Entrepreneurs 47
4.2.3 Savings Status of Small-Scale Agro-Based
Entrepreneurs 48
4.2.4 Savings Patterns of Small-Scale Agro-Based
Entrepreneurs 49
4.3 Investment Patterns of Small-Scale
Agro-Based Entrepreneurs 50
4.4 Sources of Capital for Investment by
Small-Scale Agro-Based entrepreneurs 51
4.4.1 Sources of Capital
51
4.5 Factors Affecting Income, Savings and
Investment Patterns of Small-Scale
Agro-Based
Entrepreneurs in Anambra State 52
4.5.1 Factors Affecting Income Pattern of
Small-Scale Agro-Based Entrepreneurs 52
4.5.2 Factors Affecting Savings Pattern of
Small-Scale Agro-Based Entrepreneurs 54
4.5.3 Factors Affecting Investment Pattern of
Small-Scale Agro-Based Entrepreneurs 55
4.6 Factors Affecting the Income of
Small-Scale Agro-Based Industry 57
Chapter Five:
Summary, Conclusion and Recommendations
5.1 Summary
60
5.2 Conclusion
62
5.3 Recommendations 63
References
65
Appendices
72
LIST OF TABLES
Table
1: Age distribution of small-scale
agro-based entrepreneurs in Anambra State 39
2: Distribution of small-scale Agro-based
Entrepreneurs according to marital status 41
3: Frequency distribution of small-scale
agro-based entrepreneurs according to Household size 41
4: Frequency distribution of small-scale
agro-based entrepreneurs according to level of education 42
5: Frequency distribution of small-scale
entrepreneurs according to their type of agro-based activities 43
6: Frequency distribution of small-scale
agro-based entrepreneurs according to their level of experience 45
7: Frequency distribution of small-scale
agro-based entrepreneurs according to Their level of income 46
8: Distribution of small-scale agro-based
entrepreneurs according to their sources of income
48
9: Frequency distribution of small-scale
agro-based entrepreneurs according to their monthly savings 48
10: Pattern of Investment of agro-based
entrepreneurs 51
11: Regression result on the factors
affecting the income of small-scale agro-based entrepreneurs
53
12: Regression result on the factors
affecting the savings of small-scale agro-based entrepreneurs 55
13: Regression result on the factors
affecting the investment pattern of small-scale agro-based entrepreneurs 57
14: Likert rating scale of factors affecting
income of small-scale agro-based industry 58
LIST OF FIGURES
Figure
1: Sex distribution of small-scale
agro-based entrepreneurs in Anambra State
40
2: Nature of business of small-scale
agro-based entrepreneurs 44
3: Possession of requisite skills by
small-scale agro-based entrepreneurs 46
4: Distribution of small-scale agro-based
entrepreneurs according to their pattern of savings 49
5: Sources of capital for agro-based
entrepreneurs 52
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The role of
agriculture and agro-based industries in Nigeria cannot be over emphasized.
Agriculture is a source of food for consumption by man, feeds for animals and
raw material for the agro-based industries (Edoumiekumo&Audu, 2009).
Agriculture contributes to the growth of the economy and also provides employment
opportunities for the teeming population and eradicates poverty in the economy,
serves as means of income and livelihood, helps in wealth creation and
generation of foreign exchange earnings for the country (Nigerian Investment
Promotion Commission, 2004). This dominance of agriculture places great premium
on the activities of agro-based industries and entrepreneurs in the growth and
development of such economies. According to KarandMishra (2004), agro-based
enterprises are involved in the production, processing, preservation,
manufacturing of agricultural inputs and marketing of agricultural products,and
the individuals involved in these activities are the entrepreneurs. An
entrepreneur, according to Amuseghan (2008), recognizes opportunities and
utilizes them. The entrepreneur starts a business, arranges business ideas and
takes risks in order to make profit.
In Nigeria, just like
other developing economies the activities of agro-based entrepreneurs are on
small-scale bases not exceeding annual turnover of N500,000 (CBN, 2005).
Onyebinama (2004) reported that agriculture and agro-based activities in
Nigeria are largely on small-scale involving land holding between one (1) and
five (5) hectares. In this context therefore, small-scale agro-based
entrepreneurs refers to entrepreneurs that are involved in the processing of
agricultural products and whose annual turnover are less than N500, 000. As
such, this study will concentrate on entrepreneurs that are involved in the
processing of agricultural products on small-scale level. Therefore,
entrepreneurs involved in the processing of agricultural products add value to
them by elongating their shelf life, reducing their bulkiness and creating
different varieties and forms. Such agricultural products include cassava, palm
nuts, palm kernel, groundnut, plantain, rice, soybean and maize. This has
become very imperative in view of the high post-harvest losses associated with
agricultural products due to their ease of perishability (Mehta, 2012).
Income, savings and
investment are very important parameters that define the wellbeing and
performance of small-scale agro-based entrepreneurs. This is because Nigeria,
like other developing economiesfaces the herculean task of finding sufficient
capital to pursue her developmental efforts (CBN, 2005). As such, the
activities of the dominant sector in the economy (i.e. small-scale agro-based
entrepreneurs) are affected by their income, savings and investment patterns.
Several surveys have shown that Nigerians are trapped in the vicious circle of
poverty−low income, low savings and low investments (Obayelu, 2012). The
country, therefore, needs very high rates of savings and investments to make a
leap forward in her efforts of attaining high levels of growth (CBN, 2005).
Successive administrations
in the country have placed emphasis on savings and capital formation as the
primary instruments of economic growth in order to increase national income
(CBN, 2005).In other words, capital formation plays a vital role in continuous
increased production of goods and services, and as such, capital formation has
to be supported by appropriate volume of savings. A growth in economic
activities stimulates investment, and increased investment in turn enhances
economic growth, income and savings levels (Mishra, Das & Mishra, 2010). As
noted by Obayelu (2012), increase in savings, use of increased savings for
increased capital formation, use of increased capital formation for increased
savings for a further increase in capital formation constituted the strategy
behind economic growth. This process of increased capital formation leading to
increased savings and increased savings leading to increased capital formation
will continue till savings, capital formation and income reach desired levels
after which savings and capital formation gets stabilized and there would be a
steady and self-sustaining increase in national income (Obayelu, 2012).
According to The
Macmillan English dictionary (2007), income refers to money that someone gets
from working or from investing money. The investment of money is the
pre-occupation of entrepreneurs. In the view of Keynes (1936) the income of the
agro-based entrepreneurs is the excess of the value of entrepreneurs’ finished
output over his prime cost.In other words, it is taken as being equal to the
quantity of the output, depending on his scale of production which he endeavors
to maximize.The level of income of small-scale agro-based entrepreneurs is
central to their savings and investment patterns as almost all models of
economic development incorporate a critical role for savings and capital
formulation (Morokolo, 2001). Morokolo (2001) reported the view of Gersovitz
(1995) that several theorists of the low-level-equilibrium trap adopt the
simplification that all income is consumed until a critical level is reached,
while a fixed proportion of income above this level is saved. The level of
income of the small-scale agro-based entrepreneurs depends upon certain
independent factors like family size, number of earners, age, educational
level, asset level, savings and investment (Adetunji, 2002). Yusuf and Peters
(1984) had argued that Keynesian economists regard the level of current income
as the very first rung in a theory of savings. How much an individual, a
family, a region and a nation might save depends, quite appropriately on total
earnings.
Savings according to
Amu and Amu (2012) refers to an amount of money put aside for future use. It is
the sacrifice of current consumption to allow for capital accumulation, and is
very imperative for supporting and developing rural industries (Obayelu, 2012).
Savings provide numerous benefits to small-scale agro-based entrepreneurs
directly for investment and indirectly as indication for repayment ability,
increase in credit rating and as collateral in a credit market (Brata, 1999).
Investment on its
part is the process of injecting capital into a business with the view to
generate further capital (Arene, 2008). It leads to increased production which
later enhances more consumption and income. The income-expenditure model holds
that it is at the point where investment equals savings that the economy
attains equilibrium. Adam and Agba (2006) view savings as an important
macroeconomic variable that impact significantly on the rate of capital
accumulation, productivity, and the independence of a nation in terms of
capital and ownership of domestic assets. Alade (2006) succinctly hints that a
farmer who consumes the seedlings meant for the next planting season does not
expect any harvest. It follows therefore, that high level of domestic savings
will facilitate investment, increase in productivity and finally growth in the
economy.