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The purpose of this study was to see how micro-finance lending affects agricultural productivity in Nigeria. The study looked at how farmers used microfinance credit in different ways. In addition, the breadth of credit accessibility and the magnitude of credit were investigated. The study was limited to farmers in Otuoke, Bayelsa state, in order to provide exact data and brief findings. Farmers from Oloibiri, Opume, Otakeme, and Otuabula were all involved in this research. The study used a survey research approach, with 284 people enrolled after their agreement was obtained. The researcher followed all of the covid-19 safety precautions to the letter.

The findings of the study revealed that there is a positive significant relationship between micro-finance credit and increased agricultural productivity, as well as that farmers in Otuoke and other parts of the OGBIA local government area of Bayelsa state do access credit financing from micro-finance banks, using Pearson correlation statistics and the t-test statistical tool. The study highlighted a number of obstacles, including high interest rates, a lengthy credit application process, and delayed credit funding. The report strongly suggests that the government build and maintain a financial infrastructure to assist agricultural loan financing. It should direct prudential regulation and oversight, particularly for deposit-taking institutions, to require information that clarifies banks’ financial performance, providing transparency.



Background to the Study

Subsistence has been related to agriculture in most developed countries, either directly or indirectly. According to the Food and Agriculture Organization (2016), agriculture is the primary source of income for more than 60% of the world’s population. About 75 percent of the world’s poor live in rural areas, and 86 percent of them earn money in agriculture (ECG, 2011). For all of these folks, maintaining a strong harvest is critical. Agriculture’s growth has slowed in recent years. The world’s vital nutrients are growing at a pace of about 1% per year (FAO, 2009a), while the world’s population is growing at about 1.2 percent per year. Land is a scarce resource; in many developing countries, land expansion is impossible (ECG, 2011).

As a result, the only way to meet the future food needs of a growing population is to boost agriculture. Modernization of agriculture in many places of the world may result in faster-than-large-scale agriculture due to a lack of arable land and integration. As a result, diversification and the development of more and more methods, as well as resource savings, are significant goals (Dixon et al., 2001). The disparity between the actual advantages of most crops and the actual crops shows that efficiency has the potential to boost food and crop output (Zepeda, 2001). According to the FAO, crop production accounts for around 80% of growth in food production in developed countries, whereas only 20% of the acreage is devoted to crops (FAO, 2009c). As a result, major strikes are necessary not only to meet the rising demand for more crops, but also to prevent additional deforestation, environmental damage, accidents, and global warming. Recreational farming can play a significant part in industry, both in terms of supplies and needs (Johnston and Mellor, 1961). Agriculture, for example, has contributed raw materials to industry and other industries and requires modern inputs such as research and development and information technology. In terms of demand, large yields can boost rural residents’ incomes, increasing demand for locally produced goods (Dethier). It has the ability to create a seamless connection between farm and modern industry, as well as to create new jobs and raise urban and residential incomes in this way. Furthermore, one of the difficulties facing the international community is food security. “Everyone must adjust their diet, lifestyle, and lifestyle to an active, healthy lifestyle that fits their physical, health, and economic needs at all times,” according to food security (FAO, 2010) Olon. People consider it a basic human right, but thousands of people around the world, particularly in the food industry in low-income nations, continue to suffer from poverty and hunger (IEG, 2011). The majority of these people reside in rural areas and rely on agriculture for their survival.

Longevity is another key component in food safety. This means that food should be prepared not only for future generations, but also on demand. According to Rosegrant et al. (1995), the global average yearly crop growth rate declined from 2.42 percent in 1974-82 to 1.78 percent in 1982-90. In Asia, the leading rate is 2.62-1.66 percent, with China at 4-6 percent. Other crops, such as corn, wheat, sorghum, and other staple foods, are depicted in a similar light (Pinstrup-Andersen, 1994). Many physical, social, economic, and political elements, both nationally and internationally, contribute to food security (Chang and Zepeda, 2001). In addition to infrastructure and infrastructure development, other major economic sectors, such as population growth, demographic change, fast urbanization, and economic diversification, are required.

Statement of the Problem

The Nigerian financial system has implemented policies that facilitate credit access. The goal is to ensure that farmers have access to loans in order to carry out their farming operations. Microfinance banks, commercial banks, and the Agricultural Bank of Nigeria have all asked them to boost agricultural financing. One approach to achieve this is to see if the credit unions’ operations have responded to the analysis of the farmers who participate in the credit market. To pay the cost of cultivation throughout the growing season, many agricultural goods, such as rice, require significant rates.

As a result, microfinance lending plays a critical role in boosting agriculture (Iqbal, Munir and Abbas 2003). It is impossible to overestimate the value of finance to small farmers’ agricultural productivity (Siddiqi et al., 2004). The provision of financing services can aid agricultural technical advancement, resulting in higher incomes.

Credit financing has played an important role in improving agriculture before planting and harvesting (Akpokodje, Lançon, & Erensten, 2001); therefore, as argued by Saboor, Hussein, and Munir (2009), it is critical that farmers receive income and credit on time in order to obtain the tools, raw materials, and labor required for agriculture. Loans should be required not only for agricultural purposes, but also for personal use, particularly during the non-planting season.

The Nigerian Agricultural and Cooperative Bank (NACB) is designing special loans to promote agricultural production, according to the National Bankruptcy Reform Commission (NAP). The program now has 6,000 loans for cereal production, up from 3,000 in 1989. (Akpokodje, Lançon, & Erensten, 2001) Up to 5,780 loans were accepted.

The government has taken steps to ameliorate the problem, including as the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), which included a 2009 investment to boost agricultural output. As a result, the purpose of this research is to determine the influence of microfinance lending on agricultural output in Nigeria.

Objectives of the Study

The purpose of this research is to determine the influence of microfinance lending on agricultural productivity. The study’s objectives are as follows:

  1. Determine the effect of microfinance lending on Otuoke’s agricultural productivity.
  2. Determine the extent to which Otuoke farmers have access to finance.
  3. Examine the amount of credit finance that farmers have gotten.

Hypotheses of the Study

In this study, the following null hypotheses were established and tested:

H01: Microfinance lending has no positive link with increased agricultural productivity.

H02: Microfinance credit is unavailable to farmers in Otuoke.

Research Questions

The study will be guided by the following questions:

  1. How often do farmers use microfinance banks for agricultural loans?
  2. In what ways have Otuoke’s farmers profited from microfinance loans?
  3. What are the perceived barriers that farmers face in obtaining credit from microfinance institutions?

Significance of the Study

Government-funded microfinance loan services have taken a classic soft lending approach, primarily targeting the agricultural sector and other non-agricultural sectors. The repercussions, on the other hand, were just temporary. If concrete steps are done to save the agriculture industry, the Nigerian economy will profit more.

This job will provide the researcher with the opportunity to expand his or her knowledge. Farmers in Otuoke will have a better understanding of the microfinance institutions’ ability to help them raise their agricultural inputs. The difficulties and findings presented in this study will help policymakers design policies aimed at enhancing agricultural productivity and funding programs in Bayelsa state, and more specifically throughout Nigeria. This research should not be regarded as the final word on research and decision-making, but rather as a guide that acknowledges its limitations.

Methods of Data Analysis

The Pearson correlation analysis will be used to examine the association between micro-finance credit and a rise in agricultural produce in Otuoke in this quantitative study. The survey responses will be analyzed using the chi-square statistical method to see if farmers in Otuoke have access to micro-finance banks’ lending facilities.

Scope and Limitation of the Study

The goal of this study is to gather information and opinions about Nigerian farmers and agricultural productivity. However, due to the inaccessibility of some data and in order to present clear and brief findings, this study will be limited to farmers in Otuoke, Bayelsa state, and the activities of Bayelsa state microfinance institutions.

Organization or Plan of the Study

This research will be divided into five chapters. The first chapter discusses the research problem, the study’s aims, and the null hypotheses that have been proposed. The second chapter examines related literatures, develops a theoretical framework, and examines several empirical studies. The methodology and approach used in this study are detailed in Chapter 3. This includes the method for gathering data as well as the statistical tool. The obtained data is presented in Chapter 4 along with an analysis of the data for appropriate interpretation. A finding from the previous chapter was repeated in the fifth chapter. The study’s summary is ensured, and a conclusion is formed.

Definition of Terms

Agriculture refers to all farming operations carried out by individuals or organisations for personal or commercial objectives in this study.

In this study, productivity refers to the numerous outputs obtained through the labor or machinery used by individuals or groups of farmers.

Microfinance credits: These are loans provided by microfinance institutions for agricultural purposes.

Otuoke: This is the term for the study location.

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