Abstraction
Over the last three decennaries microcredit has gained tremendous success in cut downing poorness on a planetary graduated table. As an efficient fiscal mechanism, microcredit has the possible to enable assorted governmental and non-governmental histrions to recognize the millenary development ends. Based on the field research on microfinance in the rural agriculture communities in Ikenne Local Government Area of Ogun State, Nigeria, this paper through empirical observation examines and analyses the importance of microcredits in advancing agricultural productiveness in the survey country. The survey reveals that entree to microcredits could hold prospect in bettering the productiveness of husbandmans, and lending to elating the supports of deprived rural agriculture communities. However, the husbandmans needed to be shrewd at the use of recognition installations in order to accomplish the end of end product maximization.
Introduction
In recent old ages, microcredit has become a much favoured intercession for poorness relief in the development states. There is barely a hapless state and development oriented giver bureau ( many-sided, bilateral and private ) non involved in publicity ( in one signifier or other ) of a microfinance programme. Many accomplishments are claimed about the impact of microfinance programmes, and an outside perceiver can non but wonder at the scope of diverseness of the benefits claimed. With an estimated 1.3 billion people of the universe life on incomes of less than $ 1 a twenty-four hours, the authoritiess of the hapless states, particularly the Sub-Saharan Africa where the bulk of the universe ‘s hapless live, face tremendous challenge to cut down poorness. The handiness of microcredit, loosely defined as the proviso of fiscal services such as nest eggs and recognition to the hapless family is necessary but non a sufficient status for rapid poorness decrease.
However, microcredit can play an of import function. One component of an effectual scheme for poorness decrease is to advance the productive usage of farm inputs. This can be done by making chances for raising agricultural productiveness among little and fringy husbandmans. Microcredit is peculiarly relevant to increasing productiveness of rural economic system, particularly agribusiness. In an environment where economic growing is happening, microcredit besides has the capacity to convey the benefits of growing more quickly and more equitably through the informal sector. It is good documented that for many little graduated table husbandmans, deficiency of entree to fiscal services is a critical restraint to the constitution or enlargement of feasible agricultural endeavors.
Microcredit may enable little and fringy husbandmans to buy the inputs they need to increase their productiveness, every bit good as financing a scope of activities adding value to agricultural end product. Access to salvage installations besides plays a cardinal portion in enabling the hapless to smooth their ingestion outgos, and in funding investings which improve productiveness in agribusiness and other economic activities. However, much remains to be done, to incorporate microcredit establishments to the full into the mainstream of rural fiscal systems, and for commercial Bankss to acknowledge their full potency.
Justification of the Study
About 70 per centum of Nigerian population lives below the poorness line, bulk of who live in the rural sector of the economic system. But these hapless did non practically have any entree to institutional recognition, chiefly because they are non considered recognition worthy. Hence, they could non borrow from the Bankss or other fiscal establishments. The informal money markets, including the traditional usurers, provide loans but charge extortionate rates of involvement. Microcredit therefore found a infinite to run for the hapless.
Aims of the Study
To find the socio-economic factors responsible for the productiveness of husbandmans in the survey country.
To look into into the productiveness derived functions between the donees and non-beneficiaries of microcredits in the survey country.
To find the differences in entree to agricultural resources between the donees and non-beneficiaries of microcredits in the survey country.
Statement of Hypothesiss
There is no stastically important difference between the donees and non-beneficiaries of microcredits with regard to size of farming area
There is no stastically important difference between the donees and non-beneficiaries of microcredits with regard to labor input
There is no stastically important difference between the donees and non-beneficiaries of microcredits with regard to weedkillers.
There is no stastically important difference between the donees and non-beneficiaries of microcredits with regard to seting stuffs.
There is no stastically important difference between the donees and non-beneficiaries of microcredits with regard to farm end product.
Literature Review
The planetary image sing the outreach of microcredit provides the parts made by the programme. A sum of 2186 Microfinance Institutions ( MFIs ) have been reported to hold reached 54.9 million clients with a current loan, 26.8 million of whom were among the poorest when they started with the programme. Out of the 2186 establishments that had reported to the Microcredit Summit Campaign, 1075 are in Asia, 740 are in Africa, 230 are in Latin America and the Caribbean, 59 are in North America, 59 are in Europe, and 23 of them are in the Middle East. Out of the entire planetary clients of 54.9 million, 47.9 million are in Asia, 4.5 million are in Africa and 2 million are in Latin America and Caribbean ( Salehuddin, 2002 ). Sustainable bringing of microfinance services on a big graduated table in some states has generated positive developments in microfinance policies and patterns among all stakeholders: authoritiess, cardinal Bankss, microfinance service suppliers, and external support bureaus.
Empirical grounds shows that, among the hapless, those take parting in microfinance plans who had entree to fiscal services were able to better their well-being both at the person and family degree much more than those who did non hold entree to fiscal services. It was reported by CGAP ( 2009 ) that Bangladesh Rural Advancement Committee ( BRAC ) clients increased family outgos by 28 % and assets by 112 % after being involved in BRAC ‘s microcredit plan. Furthermore, it was revealed that after more than eight old ages of adoption, 57.5 % of Grameen borrower families were no longer hapless as compared to 18 % of non-borrower families. In Lombok, Indonesia, the mean income of Bank Rakyat Indonesia ( BRI ) borrowers increased by 112 %б and 90 % of families graduated out of poorness.
In Vietnam, Save the Children clients reduced nutrient shortages from three months to one month. Besides, at Kafo Jiginew in Mali, clients who had been with plan for every bit small as one twelvemonth were significantly less likely to hold experienced a period of acute nutrient insecurity; and those that had, had experienced a shorter period ( CGAP, 2009 ). In Bangladesh, a study of 1,300 clients and non-clients showed that recognition clients were significantly more sceptered than non-clients in footings of their physical mobility, ownership and control of productive assets ( including land ), engagement in determination devising, and consciousness of legal and political issues.
A World Bank survey has shown groundss of wide-ranging impacts of microcredit on the status of the borrowers ( Pitt and Khandker, 1998 ). The survey examined programmes of BRAC, Grameen Bank and Bangladesh Rural Development Board ( BRDB ). The findings revealed that per capita outgo and family ‘s net worth have increased due to microcredit among the borrowers of all these programmes. A BRAC research examined the impact of poorness in wider dimension. The consequences showed that 52 % of the BRAC member families were below the poorness line while a higher figure ( 69 % ) of the comparing families was lying below the line. The overall findings showed that among the BRAC members at that place have been gradual betterments in the indexs such as wealth, gross gaining assets, value of house constructions, the degree of hard currency earned, per capita outgo on nutrient and entire family outgo ( Husain, 1998 ).
Materials and Methods
Study country: This survey was conducted in Ikenne Local Government Area of Ogun province, Nigeria. This is country of the province is one of the topographic points that are preponderantly rural in nature. The bulk of the people populating in this vicinity were involved in farming activities either on a portion clip or full clip footing.
Sampling Techniques: Ninety small-scale plantain husbandmans were sampled in the survey country ; these included 31 microcredit donees and 59 non-beneficiaries. The husbandmans were selected through the usage of simple random sampling technique.
Methodology
The informations were collected during the 2008/2009 agrarian twelvemonth. Structured questionnaire was administered and interview conducted for the selected husbandmans in order to roll up relevant informations. Descriptive statistics, the multiple arrested development analysis, Zhou trial, and the trial of difference between agencies of factors were used in run intoing the aims of this survey. The socio-economic variables such as age, instruction, household size, farming area size, farming experience, entree to recognition installations, were presented through descriptive statistics. This was besides used to compare the mean input and end product degrees of the two husbandmans ‘ groups. The multiple arrested development analysis was fitted to find the socio-economic features of the husbandmans responsible for the productiveness of the husbandmans. Besides, the Cobb Douglas production map was fitted to measure the factors responsible for plantain production among the selected little graduated table husbandmans. The theoretical account could be expressed as follows:
Production map:
Q = degree Fahrenheit ( X1, X2, X3, X4 )
4
Q = a + i??i ? Xi + i?
i=1
Q = a + i??1X1 + i??2X2 + i??3X3 + i??4X4
Where
The dependent variables are as follows:
Q = Output of manioc ( Bunches ) ; and i? = error term ; i??б i??i ‘s = coefficients to be estimated.
Double log arrested development analysis would be fitted as
Q = degree Fahrenheit ( X1, X2, X3, X4 )
Where X1= land ( hour angle ) ; X2 = labor ( mandays ) ; X3 = capital ( naira ) ; and X4 = stuffs ( naira ).
For the microcredit non-beneficiaries, it would be stated as
Ln Q = ln A + a1 lnX1 + a2 lnX2 + a3 lnX3 + a4 lnX4
For the microcredit donees, it would be stated as
Ln Q = ln B + b1 lnX1 + b2 lnX2 + a3 lnX3 + a4 lnX4
For the combined microcredit donees and non-beneficiaries ( utilizing dummy variable )б the theoretical account could be stated as
Q = degree Fahrenheit ( X1, X2, X3, X4, X5 ; D )
Ln Q = ln C + c1 lnX1 + c2 lnX2 + a3 lnX3 + a4 lnX4 + c5 lnX5 + c6 D
Where X5 = sum of recognition ( naira ) ; D = 1 if microcredit donee ; D = 0 if microcredit non-beneficiaries.
These three equations would be estimated in order to run into the aim ( two )б and the Chow trial would be used on the three equations to find the productiveness derived functions between the microcredit donees and microcredit non-beneficiaries.
Finally, the t trial would be used to prove the aforestated hypotheses ; the difference between agencies of the variables sing the two husbandman groups would be used.
Consequences and Discussion
Table 1 shows that the donees of microcredit strategies had higher age, family size, degree of instruction, labour input, gross and end product degree ; the non-beneficiaries had higher agrarian experience, farm size, input of weedkiller, seting stuffs ( chumps ) and capital. Forty out of 90 selected respondents were females which represents about 44.44 % of the respondents, the staying were male husbandmans. About 32.5 % of the female husbandmans had entree to microcredit installations, and 36 % of the selected male husbandmans had entree to the same installations in the survey country. In all, merely approximately 34.4 % of the selected husbandmans had entree to microcredit installations. Table 2 shows that the donees had higher mean productiveness than the non-beneficiaries utilizing all the presented indices, except end product per labor input. Table 3 shows that bulk of the selected husbandmans obtained their credits through relations and husbandmans ‘ concerted societies ; no 1 of the selected husbandmans identified his/her beginning of credits with commercial or microfinance Bankss.
Model 1: Socio-economic determiners act uponing farm productiveness in the survey country
ln Q = 72.062051 – 0.231620X1 + 24.650994X2 + 14.834319X3* – 1.655220X4 + 84.649038X5***
( 91.677983 ) ( 1.883309 ) ( 24.210107 ) ( 8.789012 ) ( 2.603130 ) ( 28.516597 )
+ 0.463962X6
( 1.967250 )
Note: * – 10 % degree of significance ; *** – 1 % degree of significance
Where Q = end product of plantain ( Bunches ) ; X1 = age ( old ages ) ; X2 = sex ( dummy: male = 1 ; female = 0 ) ; X3 = family size ; X4 = degree of instruction ( old ages ) ; X5 = nature of agriculture ( silent person: full clip = 1, otherwise = 0 ) ; and X6 = farming experience ( old ages ).
The most important socio-economic features of the selected husbandmans in the survey country include nature of agriculture ( important at 1 % ) and family size ( important at 10 % ). The nature of agriculture is measured utilizing dummy variable: a husbandman rehearsing full clip agriculture is scored 1, otherwise he is scored 0. The consequence shows that the husbandmans rehearsing full clip farming be given to be more productive than those rehearsing portion clip agriculture, while the family size besides contribute to the degree of improved productiveness since most household members normally serve as beginnings of labor. In add-on, the consequence shows other socio-economic variables to include age, sex, degree of instruction and agrarian experience.
The consequence shows that the younger husbandmans seemed to be more productive than the older 1s. Sexual activity was measured utilizing a dummy variable: a male husbandman was scored 1, and a female husbandman was scored 0. The consequence shows that the female husbandmans are less productive than the male husbandmans in the survey country. The agrarian experience seemed to lend to the degree of productiveness among the selected husbandmans, while degree of instruction does non look to be a considerable socio-ecomic variable for determinig the degree of productiveness in the survey country.
Model 2: Production map of the determiners of productiveness of the selected microcredit non-beneficiaries in the survey country
Ln Q = 1.227290 + 0.392575X1*** – 0.139889X2 + 0.249875X3** + 0.165334X4
( 1.522950 ) ( 0.137310 ) ( 0.117749 ) ( 0.099072 ) ( 0.114810 )
Note: * * – 5 % degree of significance ; *** – 1 % degree of significance
The consequence presented in the above theoretical account shows that land size and capital are the most important variables finding the productiveness of the selected husbandmans in the survey country ; both have 1 % and 5 % degrees of significance severally. It could be observed that the husbandmans with larger land size seemed to be more productive than those rehearsing on smaller farming area. Besides, higher capital spending was observed to be a important variable among non-beneficiaries of microcredits. Other variables include labour and cost of stuffs. There seemed to be an over-utilization of labour input among the selected non-beneficiaries, and it could be observed that the cost of stuffs used in cultivation enhances productiveness in the survey country.
Model 3: Production map of the determiners of productiveness of the selected microcredit donees in the survey country
Ln Q = 1.962812 + 0.267809X1** + 0.343364X2 + 0.021327X3 + 0.082112X4
( 1.371720 ) ( 0.203687 ) ( 0.164781 ) ( 0.021016 ) ( 0.108224 )
Note: * * – 5 % degree of significance
The consequence presented in the above theoretical account shows labour input as the major important input among the selected beneficiary husbandmans in the survey country ; the labor input is important at 5 % degree of significance. It could be deduced that addition in labour input would ensue in improved productiveness among the selected microcredit beneficiary husbandmans. Other variables include land, capital and cost of stuffs. Any addition in each of these inputs would ensue into addition in productiveness of farm green goods.
Model 4: Production map of the determiners of productiveness of the selected microcredit donees and non-beneficiaries in the survey country
ln Q = 2.643822*** + 0.405949X1*** + 0.101927X2 + 0.014149X3 + 0.135087X4* + 0.377753X5
( 1.000795 ) ( 0.113043 ) ( 0.094999 ) ( 0.022391 ) ( 0.081687 ) ( 1.286694 )
– 0.009211X6
( 0.129027 )
Note: * – 10 % degree of significance ; *** – 1 % degree of significance
The consequence presented in the above theoretical account shows the production map for all the selected husbandmans including both donees and non-beneficiaries of microcredits. It shows that land size and cost of stuffs are the most important variables observed among the selected husbandmans. The land size has 1 % degree of significance, while cost of stuffs has 10 % degree of significance. It could be deduced that an addition in the couple would take to an improved productiveness among the selected husbandmans in the survey country. Furthermore, an addition in labour input and capital would besides take to an addition in the production degree. In add-on, entree to credits was measured utilizing dummy variable: any husbandman with an entree was scored 1, while those with no entree were scored 0. It was observed that entree to credits seemed to heighten increased productiveness in the survey country. However, the sum of recognition obtained by the husbandmans in the survey country seemed non to lend positively to degree of productiveness in the survey country. This could be as a consequence of non-judicious use, or recreation of credits obtained to other utilizations apart from the intended farm endeavors.
Note: * – 10 % degree of significance ; ** – 5 % degree of significance ; *** – 1 % degree of significance
The Major Findingss from the Study
From the above stated consequences, it could be observed that
The donees of microcredits were somewhat more productive with regard to productive inputs such as land, weedkillers, capital and planting stuffs, than those that had no entree to the same installations in the survey country.
Most of the credits obtained were done relations and husbandmans ‘ concerted societies ; none of the selected husbandmans had entree to credits through commercial or microfinance Bankss.
Farmers with larger family size were found to be more productive than those with smaller family size ; this was due to the usage of family members as beginnings of labor input.
Farmers who practise farming activities on full clip footing were discovered to be more productive than those rehearsing on portion clip footing.
Land size and capital were the most important variables among the non-beneficiaries of microcredits, while labour input was found to be the most of import variable among the microfinance donees in the survey country. When sing all the husbandmans wholly, land size and cost of stuffs were found to be the most of import variables.
Entree to microcredit installations was observed to be of import in bettering farm production and productiveness, although the husbandmans with entree to such installations seemed non to hold made a justifyable use of the credits in the survey country, otherwise they would hold been appreciably more productive than the non-beneficiaries of microcredits.
There were important differences between the two groups of husbandmans with regard to size of farming area, labour input, use of weedkillers, and obtainance of seting stuffs ; nevertheless, there is no important difference between the two groups of husbandmans with regard to end product.
Recommendations and Decision
It could be deduced from the survey that the donees of microcredit installations were non every bit productive as expected, even though they had the potencies to be more productive than they presently were at the clip of the survey. Therefore, in order to heighten the productiveness of the donees of the microcredits every bit good as that of the non-beneficiaries, the followers could be suggested:
Since it is apparent that the non-beneficiary husbandmans needed capital for harvest production, the husbandmans should do optimum usage of opportunities available within their environments by fall ining the rank of husbandmans ‘ concerted societies in their vicinities ; this would enable them to hold entree to recognition installations through such co-ops. Furthermore, single husbandmans could take advantage of entree to relations who could afford to give out loan for productive intents.
Farmers with capable custodies within their families could do usage of such as beginnings of labor input on their farms, this is comparatively inexpensive.
Both groups of husbandmans should set increase in the size of their farming areas into consideration, if they want betterment in their production and productiveness.
It is necessary for the microcredit donees to see increasing their input of labor, while the non-beneficiaries should look into cut downing their labor input in order to heighten improved farm productiveness.
The husbandmans in the survey country should guarantee that they utilize the recognition installations within their range for the farm production intents for which they are meant. Concerted societies and other organized establishments giving out credits should set up a construction which would determine a wise usage of recognition installations so as to cut down happening of loan default.
Commercial and microfinance Bankss should do their services available in signifier of proviso of recognition installations for the little graduated table husbandmans, particularly through the husbandmans ‘ co-ops ; they should besides form a construction which would determine careful use of such credits and their refunds.
