Effect of Microcredit on Poverty Reduction among Rural Farm Households in Northeast, Nigeria

Main Article Content

S. U. Nwibo
T. O. Okonkwo
A. V. Eze
B. N. Mbam
N. E. Odoh

Abstract

The paucity of empirical evidence to show the correlation between microcredit and poverty reduction in North-East, Nigeria led to the study on the effect of microcredit on poverty reduction among rural farm households. Multi-stage random and purposive sampling techniques were employed to select 200 farm households who constituted the sample size. Data were collected primarily using structured questionnaire and analysed with the aid of descriptive and inferential statistics. The results showed informal microcredit as the major source of credit for farm households. The result further indicated that 46% of the loan applied for was disbursed, resulting to 47% rise in farm household’s income. Meanwhile, 62% of farm households surveyed were poor with poverty depth of 0.43 and poverty severity at 0.38. The regression analysis on the effect of microcredit on the income of the farm households revealed that the coefficient of income was positive and statistically significant at 1% probability. The effect of microcredit on the poverty profile of farm households revealed that microcredit exerts negative influence on poverty profile of farm households in the study area. The study recommends: the establishment of robust rural credit scheme in rural areas; and institution of policy framework that will enable poor rural households without appropriate collateral to access funds for farm and non-farm activities.

Keywords:
Microcredit, poverty reduction, rural farm households, foster, Greer, Thorbecke.

Article Details

How to Cite
Nwibo, S. U., Okonkwo, T. O., Eze, A. V., Mbam, B. N., & Odoh, N. E. (2019). Effect of Microcredit on Poverty Reduction among Rural Farm Households in Northeast, Nigeria. Asian Journal of Agricultural Extension, Economics & Sociology, 35(2), 1-9. https://doi.org/10.9734/ajaees/2019/v35i230218
Section
Original Research Article

References

Mimiko O. Nigeria spends N24.5 trillion on food importation annually; 2011.
Available:htt.//.www.misdalive.com/ articules
(Retrieval 10th Feb. 2012)

National Bureau of Statistics (NBS). The Nigeria poverty profile 2010 report. Central Business District, Abuja, NBS Publication; 2012.

Pinstrup-Anderson P, Lorch P, Rose GM. Global security: A review of the challenges: 2020 vision. Washington D.C: IFPRI; 2001.

United Nations. The Global Multidimensional Poverty Index by the United Nations; 2015.
Available:http://www.dataforall.org/dashboard/ophi/index.php/
(Accessed on 2nd March, 2015)

National Bureau of Statistics (NBS). Unemployment and under-employment report, Q4 2016. Abuja: NBS; 2017.

World Bank. Poverty and welfare in Nigeria. Lagos: Federal Office of Statistics; 1999.

National Bureau of Statistics (NBS). Snapshot of inequality in Nigeria (2004, 2013 and 2016); 2018.

International Fund for Agricultural Development (IFAD). Rural poverty report 2011. New realities, new challenges: new opportunities for tomorrow’s generation. Rome, Italy: Quintily. 2011;1-16.

Ezike KNN. Determinants of borrowing and saving capacity of smallholder farmers in South Eastern Nigeria. Ph.D Thesis submitted to the Department of Agricultural Economics and Extension, Enugu State University of Science and Technology (ESUT) Enugu. 1999;102-107.

Chowdhury A. Microfinance as a poverty reduction tool - A critical assessment. Desa Working Paper No. 89. 2009;1-12.

National Population Commission (NPC). Official Gazette of 2006 Census of North-East Nigeria. Abuja: NPC; 2006.

Mohieldin S, Write W. Formal and informal credit markets in Egypt. Center for Economic Policy Research. 2000;48(3):657-670.

Agbaeze EK, Onwuka IO. Impact of micro-credit on poverty alleviation in Nigeria – The case of Enugu East Local Council. International Journal of Business and Management Review. 2014; 2(1):27-51.

Okonkwo N. Rural poverty: A cog in the development wheel? 2010.
(Retrieved June 16, 2009)

Available:http://media21geneva.org/index.ph p.

Akinbode SO, Salami AO, Ojo OT. Impact of micro finance on poverty status of small scale crop farming households in Southwest Nigeria. American Journal of Economics. 2013;3(6):322-329.

Adekoya OA. Analysis of farm households poverty status in Ogun States, Nigeria. Asian Economic and Financial Review. 2014;4(3):325-340.

Adeyemi KS. Institutional reforms for efficient microfinance operations in Nigeria. Central Bank of Nigeria Bullion, 2008;32(1):26-34.

Umeh JC, Ogah JC, Ogbanje C. Socio-economic characteristics and poverty among small-scale farmers in Apa Local Government Area of Benue State, Nigeria. International Conference on Food and Agricultural Sciences, IPCBEE, IACSIT Press, Singapore. 2013;55:106-111.

Adepoju AO, Obayelu OA. Livelihood diversification and welfare of rural households in Ondo State, Nigeria. Journal of Development and Agricultural Economics. 2013;5(12):482-489.

Akwaa-Sekyi EK. Impact of micro credit on rural farming activities: The case of farming communities within Sunyani Area. Management Science and Engineering. 2013;7(4):23-29.

Hulme DA, Mosley P. Finance Against poverty. London: Routledge; 1996.

Copestake J. Mainstreaming microfinance: Social performance management or mission drift? World Development. 2007; 35(10):1721-1738.

Obadan M. Analytical framework for poverty reduction: Issues of economic guide versus other strategies. Annual Conference of Nigerian Economic Society, Obaseki ed. Nigeria Economic Society, Ibadan. 1997;367-382.

Adepoju BA. An appraisal of the effect of microcredit schemes on poverty reduction among women in rural communities of Kano State, Nigeria. International Academy of African Business and Development. 2005;6:354-362.

Rahji MAY, Adeoti AI. Determinants of agricultural credit rationing by commercial banks in South Western, Nigeria. International Research Journal of Finance and Economics. 2010;5:152-160.