ANALYSIS OF CREDIT FACILITIES OF SMALL SCALE FAMERS

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CHAPTER ONE

1.1  Background To The Study

Credits constitute a micro- financial grant that is made available by government through financial institutions to aid in the development of the economy. The agricultural sector consist of one of the fundamental sector of government which it seeks rapid development. Consequently successive administration have made efforts to develop the agricultural sector through the formulation and implementation of policy aimed at providing access to micro credit  to small scale farmers . However it is pertinent to note that small scale farmers have not been able to significantly access micro credit in the recent past due to bottleneck and bureaucratic process which have left the agricultural sector underdeveloped. Financial institution  have not shown much interest in small scale farmers  as many small scale farmers do not have collaterals  and financial capacity to meet banking requirements to secure loans. Also they find it risky and a transaction cost to extend credit to small scale farmers. Many corrupt politicians have also undermined the process to divert funds meant for small scale farmers to other projects. Therefore small scale farmers have consistently found it difficult to access micro- credit to boost agricultural production. It is therefore pertinent to enhance the access of micro credit to small scale farmers through improved financial regulatory framework to eliminate stringent requirements and procedures, formulate and direct policy implementation which give small scale farmers   access to micro credit. White, T.K. (1975) ‘Credit and Agricultural Development’. An

International Bank for Reconstruction and Development (IBRD) Paper.

Rural Development Series.

 The research therefore seek to proffer an analysis of credit facilities of small scale farmers

1.2  Statement of the Problem

The activities of small scale farmers have not received significant motivation from government and financial institution in time past. This has been one of the reasons for the poor level of   agricultural production in the rural areas thereby affecting the overall agricultural production in the sector. The problem of lack of adequate support in the provision of credit by government and the financial institution constitute a fundamental problem confronting small scale farming in Nigeria. The agricultural sector consist of one of the fundamental sector of government which it seeks rapid development. Consequently successive administration have made efforts to develop the agricultural sector through the formulation and implementation of policy aimed at providing access to micro credit  to small scale farmers . However it is pertinent to note that small scale farmers have not been able to significantly access micro credit in the recent past due to bottleneck and bureaucratic process which have left the agricultural sector underdeveloped. Financial institution  have not shown much interest in small scale farmers  as many small scale farmers do not have collaterals  and financial capacity to meet banking requirements to secure loans. Also they find it risky and a transaction cost to extend credit to small scale farmers. Many corrupt politicians have also undermined the process to divert funds meant for small scale farmers to other projects. Therefore small scale farmers have consistently found it difficult to access micro- credit to boost agricultural production.  The development of the sector therefore calls for the injection of funds to enhance the acquisition of equipment and inputs and investment capital for agricultural activities. Consequently it calls for the government to institute and implement policies and programs which genuinely addresses the plight of small scale farmers through the promotion and provision of micro credit for agricultural production.

1.3 Objectives of the Study

To proffer an  Analysis of credit facilities of small scale famers

To determine the significance of credit to small scale farmers

1.4 Research Questions

What is the analysis of credit facilities to small scale farmer?

What is the level of credit available to small scale farmers?

1.5 Significance of the Study

The economy having gone through economic recession is articulating the diversification of the economy through agriculture. Consequently the need for agricultural expansion and growth is imperative. Therefore the granting of credit to small scale farmers is necessary to boost the expansion of the agricultural sector.

Hence the study of this nature to foster the need of microcredit to small scale farmers

1.6 Research Hypothesis

Ho The extension of credit facilities to small scale farmers is not significant

Hi The extension of credit facilities to small scale farmers is significant

1.7 Scope of the Study

The study focuses on the Analysis of credit facilities to  small scale farmers

1.8 Limitations of the Study

The research was confronted by some constraints which include logistics and geographical factor.

1.9 Definition of Terms

Microcredit: A little amount of money granted as loan by a financial institution or government to an individual which can often be without any collateral.

Inputs: This consist of Materials (fertilizer, tools, pesticides, herbicides, and seeds) used as input for farming activities

Output: This is defined as the production Yield for a given period of time. Usually for a farming season.

Income: This is the revenue derived from the sale of agricultural outputs.

REFERENCE

Egwuatu, B.S.C. (2004) ‘Voices of Microfinance’. Microfinance Matters.

A publication of UNCDF. Issue 1 January – February 2004

Srinivas, H. (1997) ‘So, What is “microcredit”??’, The Global Development

Research Centre. 1997

Stickley, T. (1975) ‘The Agricultural System in Tunisia: Some

Observations and Recommendations’ Publication of the Department of

56Agricultural and Applied Economics, University of Minnesota, July 1976

Pp 15.

Takes, (1963) ‘Socio-Economic Factors Affecting Productivity of

Agriculture in Okigwe Division of Eastern Nigeria’, Preliminary Report,

Nigeria Institute for Social and Economic Research, Ibadan, Nigeria.

Tarauni, H.M. (1996) Impact of NACB Small Holder Loans on

Beneficiaries in Kura Local Government Area of Kano State. Unpublished

M.Sc. dissertation. Zaria: Department of Agricultural Economics and Rural

Sociology, Ahmadu Bello University.

Whitaker, M. and Loidan,(1973) ‘Supervised Credit’. No.8 Sector Analysis

Division, Bureau for Latin American Aid, Washington, March, 1973.

White, T.K. (1975) ‘Credit and Agricultural Development’. An

International Bank for Reconstruction and Development (IBRD) Paper.

Rural Development Series.

Yunus, M. (2004) ‘What is Microcredit?’, Publication by the Grameen

Bank of Bangladesh. 2004

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