Effect of Banking Sector Credit on Small-Scale Rice Farmers in Osun State Nigeria
Chapter One
Objective of the study
The main objective of the study is to examine the effect of banking sector credit on small scale rice farmers in Osun state Nigeria using ife and Oriade local government, Ila area while the specific objectives are delineated below:
- Analysis both problem and solution to small scale production of rice in Osun state.
- Examine the effect bank credit on the small scale of rice production in Osun state.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Nwaru (2004) defined credit as the present and temporary transfer of purchasing power from a person who owns it to a person who wants it, allowing the later opportunity to command another person’s capital for agricultural purpose but with confidence in the willingness and ability to pay at a specified future date. Okorie and Iheanacho (1992) also postulated that credit is the pivot on which agricultural development rest and as a resource which can be used to stimulate agricultural development in the desired direction. Adegeye and Dittoh (1985), defined credit as the process of obtaining control over the use of money, goods and services in the present in exchange for a promise to repay at a future date. It can also be referred to as a bank or non- bank facility provided at present to be borrowed in cash or kind for a productive or constructive purpose and which is to be repaid with reasonable interest at an agreed future date. It is a crucial factor in the development of the rural sector. Credit can be referred to as a bank or non-bank facility provided at present to be borrowed in cash or kind for a productive and constructive purpose and which is to be repaid with reasonable interest at an agreed future date (Adegboye 1989). Ijere and Okorie(1998) further stated that credit in peasant farmer’s hand will enable him enjoy huge profit, satisfaction, greater welfare and discovered new and improved products to satisfy a large market. They further stressed that it will generate in him (the farmer) the zeal to embark on large scale production. Credit thus provides the power to unveil abilities, vision, and talents which thereafter act as the mover of economic development. However, credit is not merely a tool for increasing production and raising farm income, it also fulfils a social function of enhancing the lives and welfare of rural people (Musugi, 2002). Credit accessibility is the ease or difficulty of acquiring credit by borrowers for purpose such as to enhance business performance. Credit accessibility is important for improvement of quality and quantity of farm products, so that it can increase farmer’s income and avoid rural migration. On the other hand, some policy makers believe that extending credit with low interest rate to farmers can support them against some result of development policies that threat welfare. Ololade &Olagunju (2013) studied the determinants of access to credit among rural farmers in Oyo state, Nigeria. Using binomial Logit regression analysis, noted that the significant determination of factors affecting access to credit by Rural farmers were gender marital status, guarantor and high interest rate. The study reveals that not being married reduces the probability of having access to credit by 83.3%.the study reveals that being a female reduces the access to credit by 71.3%. Farmers’ access to credit is positively affected by availability of guarantor and a unit increase in interest rate leads to the probability of not having access to credit. Oruonye and Musa (2012) examined the challenges of small scale farmers’ access to micro credit in Ganol L.G.A. Taraba state, Nigeria. Using a demographic data the findings revealed that about 65.7% of the respondent claimed that they have problem accessing micro credit to carry out farming activities at the beginning of farming season. The problems of micro credit accessibility in the study area according to the respondent opinion include high interest rate (20%), delay in approval by government (37.1%) and 34% of the respondent did not respond. Logistic regression analysis was employed by Obisesan (2013) to ascertain factors that influence credit accessibility. Access to credit variable (whether an individual has credit or not) was regressed on age, number of years of formal, education, gender, land area cultivated, household size, marital status, main occupation, participation in off-farm activities, membership of farmers group, years of farming experience and crop yield. The results of the Logistic regression model show that among the 11 variables used in the analysis, only 7 variables significantly influence farmer’s credit accessibility. They were: gender, age, main occupation, participation in off-farm activities, membership of farmers’ group, and years of experience and crop yield.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine effect of banking sector credit on small scale rice farmers. Farmers in Osun state form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain effect of banking sector credit on small scale rice farmers. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of effect of banking sector credit on small scale rice farmers
Summary
This study was on effect of banking sector credit on small scale rice farmers in Osun state, Nigeria. Two objectives were raised which included: Analysis both problem and solution to small scale production of rice in Osun state and examine the effect bank credit on the small scale of rice production in Osun state. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from CBN, Abuja. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Access to credit is an important factor in the quest to achieve increased rice productivity. Therefore, to improve the productivity of rice farmers, government and development partners should work together to improve the conditions of access of rice farmers to suitable agricultural credit, including the policy incentives aimed at lowering the cost of borrowing in the Nigerian agricultural sector. It could also be recommended that policies enhancing and strengthening institutional support may also be valuable in improving the productivity of smallholder rice farmers in Nigeria. A necessary addition should be developed to the assistance already being provided under Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) in the form of loan guarantees and other risk-sharing incentives, such as a regulatory environment that supports the modern contractual obligations that are characteristic of well-functioning agricultural financing. This would not only contribute to the intensification of rice production in Nigeria to meet its increasing rice demand, but also improve rice farmers’ productivity and their households’ incomes.
Recommendation
Rice farmers should be encouraged to form credit and thrift cooperative societies from which they can access much cheaper credits.
Factors that significantly influence credit access such as age and increase in annual income of the farmers should be encouraged.
References
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- Adegeye, A. J and Dittoh, J. S., 1985. Essential of Agricultural Economics Ibadan; impact publishers Nigeria Ltd. 183.
- Adegbite, A. J and Adeleye, A. O., 2011. Determinants of Farmers’ Access to Micro- Credit in Oyo State, Nigeria. Journal of Agricultural Research and Development, 10 (1). www.ajol.info/index.php/jard
- Agbor, R. A., 2004. An input assessment of Cameroun Gats by Trust Micro-Credit scheme in the mile four District, Cameroun: Report of International project management for NGO’s, participants learning, December 2004, Sweden.
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- CRADP., 2016. Cross River Agricultural Development Programme. EFLnA (Enhancing Financial Innovation and Access)., 2008. Access to financial services in Nigeria: Ileyfridingi < Musugi, O. M., 2002. Small farmers and rural credit: Struggle for access. Farm News,15(2): 11 – 16.