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Influence Of Micro Credit On Farming Household Welfare In Oshimili South Local Government Area Of Delta State




This study was carried out to ascertain the influence of micro credit on farming household welfare in Oshimili South Local Government Area of Delta State. The population of the study comprised of two hundred (200) farmers in Oshimili South Local Government Area of Delta State while the sample of the study was one hundred (100) farmers in Oshimili South Local Government Area of Delta State drawn through simple random sampling technique to serve as the representative of the entire population. The instrument used for data collection was a structured questionnaire, which was structured by the researcher. To ensure the validity of the instrument, copies of the instrument were sent to experts, one in Agricultural Education Department and one Educational Measurement and Evaluation for face validation. One hundred (100) copies of the instrument were administered to the selected farmers in Oshimili South Local Government Area of Delta State by the researcher with the help of some teachers and 88 copies of the instrument were retrieved and analyzed using mean statistics. Based on the analysis, the study found that micro credit meets farmers basic needs, meet their basic health needs and help in meeting the production needs of farming households. On the basis of the findings, the study recommended that government should make policies that will encourage farmers to take advantage of micro credit and operation of microcredit facilities should be extended to rural farmers in order to help alleviate their poverty status; and increase their agricultural productivity.




Background to the Study

The desire for improved standard of living by households in Nigeria is alarmingly on an increase despite the producer been partly the consumer of the farm produce. The gap between what is produces and needs to meetup with comfortable lifestyle in the society is very wide. It is obvious that, though the available agricultural landmark of Nigeria and Delta State in Particular is reducing due to population and development, the clamour for higher standard of living is ever rising.

The household head is therefore saddled with responsibility of meeting the individual and collective needs within the household. To execute this responsibility, the family may have to increase their level of production through expansion of farmland, adoption of new technique of farming, diversification of income source, multiple cropping, and acquisition of micro credit from financial institutions (Hussain, 2014).

This demand for micro credit facilities by households have no gender biasness because good member of female farmers became head of households due to the death of their husbands. The demand for micro credit has skyrocketed above the supply from the financial institutions thereby creating stiff competition among the customers (households) for survival.

The living standard in low income developing countries always remains crucial issue to be addressed. In many developing countries, like Nigeria, microfinance has been used as a tool to gear up the living standard of farmers and low-income earners (Hussain, 2014).

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Micro credit provides financial resources to the farming community particularly for the purchase of primary inputs like fertilizer, seeds, pesticides, machinery, equipment etc. The government considers it an important instrument for achieving higher production and attaches high priority to ensure its timely availability to the farmers. Credit requirements of the farming community have shown an increasing trend over in recent decade (Khan, 2014).

Institutions participating in the area of microfinance often provide lending—microloans can range from as small as N100 to as large as N5,000—many banks offer additional services such as checking and savings accounts as well as micro-insurance products, and some even provide financial and business education (Khan, 2014). The goal of microfinance is to give impoverished people an opportunity to become self-sufficient. Microcredit consists of programs [that] extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families (Robert, 2016). He added that microcredit is a low amount credit bearing interests granted to microentrepreneurs who do not have access to traditional banking services. This type of credit makes it possible for people who are excluded from the banking system as we know it to create or develop an income-generating activity. It can be granted to individuals as well as groups – each member of the group being a guarantee for the other.

Microfinance makes it its mission to break the cycle of poverty through an offer of both financial and social development tools aiming at the improvement of the recipients’ living conditions (Justin 2015). A micro-credit corresponds to a credit of low amount destined to people having little or no income. What is often lacking in emerging countries are not initiatives to get by, but money necessary to start your company. To respond to the needs of those atypical customers, microfinance institutions have put in place services, financial products and non-financial products that are important tools to combat poverty. In turn, microfinance is a means of reaching autonomy.

Agriculture is still the most important sector of the Nigerian economy due to the fact that it plays very important role in its developmental process. Honest survey of the current agricultural situation in Nigeria will immediately reveal not only a progressive decline of the contribution of agriculture to the gross domestic product both in relative and absolute terms, but also a stalemate in the country’s ability to maintain its food independence. Food production has not kept pace with the country’ population growth rate. While the annual rate of population growth is estimated at between 2.5% and 3%, that of food production is between 1 and 1.5% (Okpara, 2016). This substantial population growth affects urban and industrial centres more than rural areas because the population of the rural areas, where food is produced, remains essentially stable but has not met the requirements of a burgeoning urban population. In other words, while the number of food producers remains essentially unchanged, the number of consumers is rapidly increasing (John, 2016). Almost the entire output of agriculture comes from small-scale farmers with very little capital and employing techniques that are usually characterized as primitive. According to Olayide (2015), small holder farmers contribute over 95% to the total food output and own over 90% of the cultivated farmlands. Although a number of constraints to achieving increased agricultural production exists, such as non-availability of complementary inputs in the right quality quantity, poor conditions of feeder roads and other transport facilities, inadequate technologies and so on, credit is the most limiting factor in agricultural production and productivity in Nigeria (Hussain, 2014). According to Okpara (2014), micro-credit has proven as an effective and popular measure in the ongoing struggle against poverty, enabling those without access to lending institutions to borrow at banks rates to start business. It may enable small and marginal farmers to purchase the inputs they need to increase their productivity, as well as financing a range of activities adding value to agricultural output (Nasiru, 2015). A wide range of micro credit schemes has been launched in Nigeria in the last two decades to meet the needs of farmers. Examples of such schemes were the Nigerian Agricultural and Cooperative Bank (NACB), People’s Bank of Nigeria (PBN). These organizations had tailored rules and their requirements over the years to suit the context in which they operate. The Central Bank of Nigeria (CBN) introduced the Agricultural Credit Guarantee Scheme in 1977. Despite these governmental programmes and policies aimed at channeling credit to farmers, their credit problems have persisted. Most of these farm credit programmes have been criticized on account of their low recovery rate and inadequate diversified portfolio amongst others (Fakayode, 2017). Micro finance has proven to be effective and efficient mechanism in poverty reduction all over the world. This is a bold objective, since reaching the poorest families through micro finance is still infancy, and most finance institutions currently reach the poor, not the poorest. Fischer (2017) admitted that, for micro credit to have a macro impact on growth and development, we may need it to evolve in more market oriented ways, so that they can tap the capital markets, increase their size and reach and truly make a difference at the aggregate level. Micro finance programme have the potential to transform power relations and empower the poor, both men and women. This is true regardless of the methodology or whether the institution takes a minimalistic financial services approach or holistic or integrated approach. As a consequence, micro finance has become a central component of many donor agencies and national governments, gender, poverty alleviation and community development strategies (John, 2016). According to Snow (2014), micro credit programs become sustainable institution when net benefits to the community exceed total sales. Benefits accrue to the community when net businesses are successful and income increases.

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Statement of the Problems

Micro credit is found to play a vital role in the lives of farmers most especially the small-scale farmers. They take advantage of the micro credit gotten from different financial institution to increase production capacity and attend to their daily needs.

Micro credit is necessary because farming is seasonal and the farmers cannot keep waiting for the harvest time when they have needs. That is why many utilize the micro credit known as loan which may be short or long term long to attend to the needs of their respective households.

Over the years the utilization of micro credit by farmers has generated a lot of question because of the standard of living of farming household especially before the harvest time. Most farmers are found to be struggling to meet up with their basic needs despite the fact that they benefit from micro credits. This has generated mixed reactions among the general public.

It is against this backdrop that this study is carried out to ascertain the influence of micro credit on farming household welfare in Oshimili South Local Government Area of Delta State.

 Purpose of the Study

The main purpose of this study is to ascertain the influence of micro credit on farming household welfare in Oshimili South Local Government Area of Delta State. Specifically, the study is aimed at examining:

  1. The influence of micro credit on the basic needs of farming households in Oshimili South.
  2. The influence of micro credit on the production needs of the farming households in Oshimili South.
  3. Difficulties encountered by farming households in accessing micro credit in Oshimili South.
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Research Questions

 To effectively carry out the study, the following research questions were raised:

  1. What is influence of micro credit on the basic needs of farmers in Oshimili South?
  2. Does micro credit influence the production needs of the farming households in Oshimili South?
  3. What are the difficulties encountered by farming household in accessing micro credit in Oshimili South?

Significance of the Study

This study would be useful to the students, the farmers, the government, researchers and the field of Agricultural Education.

The study would enable the students to know the influence of micro credit on farming households so that they can make plans to take advantage of it when they fully go into farming activities.

The farming household would also benefit from this study because it will further expose them to the areas in which micro credit can be used to impact life positively.

Findings of the study would go a long way in calling the attention of government to the influence of micro credit on farming household welfare and the challenges faced by farming households in accessing micro credit. This will enable government device a plan to improve on the access to micro credit so that all farmers can benefit from eat.

The study would be of benefit to researchers who may wish to carry out a related study because it would serve as a reference material. Finally, the study would contribute to the body of knowledge by adding to the literature in the field of Agricultural Education.


Scope of the Study

This study is delimited to the influence of micro credit on farming household welfare in Oshimili South Local Government Area of Delta State.  With particular emphasis on influence of micro credit on the basic needs of farmers, production needs of the farming households and the difficulties encountered by farming household in accessing micro credit.

Pages:  50

Category: Project

Format:  Word & PDF               

Chapters: 1-5                                          

Source: Imsuinfo

Material contains Table of Content, Abstract and References.


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