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MICRO- CREDIT ACQUISITION AND UTILIZATION AMONG SMALL-SCALE FISH FARMERS: A STUDY OF BAYELSA STATE

 Format: MS-WORD   Chapters: 1-5

 Pages: 70   Attributes: STANDARD RESEARCH

 Amount: 3,000

 Sep 06, 2019 |  02:34 am |  1784

MICRO- CREDIT ACQUISITION AND UTILIZATION AMONG SMALL-SCALE FISH FARMERS IN BAYELSA STATE

ABSTRACT

Micro-credit to small scale farmers is essential to sustain agricultural production. This can only be achieved if this small scale fish farmers are provided with micro-credit to purchase gears, inputs, equipment, net, fertilizers, fingerlings, processing and preservation equipment, hire labour, boost working capital and to run the day to day transactions in the business and to feed the family. Unfortunately, farmers are still found looking for micro-credit to meet their needs. This study was designed to highlight the problems of micro-credit acquisition and utilization among small-scale fish farmers. The specific objective were to: Identify the micro-credit needs of small scale fish farmers, Identify the major sources of micro-credit among fish farmers, determine the terms of micro­credit acquisition among the farmers, identify the ways of micro-credit utilization among the farmers, identify the major constrain in micro-credit acquisition among the fish farmer and determine strategies for enhancing micro-credit acquisition and utilization among small scale fish farmers in Bayelse state. Six research questions and two null hypothesis were formulated to guide the study. A total of 280 respondents comprising small scale fish farmers and ten respondents from the major financial lending institutions. The data was obtained using 69 item structured questionnaire. The data were analyzed with mean and t- test. The findings of the study revealed that small scale fish farmers use the relatively small credit obtained to meet their needs. They obtain loan mainly from NACRDB. Fish farmers find it extremely difficult to achieve optimum progress and high performance due to the problems they encountered in obtaining the credit. Finally, fish farmers still felt that the credit should transform them from small-scale to middle or large scale of production by increasing their credit

CHAPTER ONE

INTRODUCTION

Background of the Study

Credit is the transaction between two paities in which one, the creditor or lender supplies money, or goods and services or securities in return for promised future payments by the other (the debtor or borrower). In economics and finance, credit is used specifically to refer to the faith placed by lender in a borrower by extending a loan to the borrower, Micro is defined by Hornby (2001) as small or small scale. Therefore, micro-credit is referred to as smalt-credit. Rogaly (1999) defined micro-credit as the provision of small loans with no minimum deposit designed for poor people who live on low income.

Micro-credit acquisition has been an age-long problem among small-scale farmers in Nigeria, despite the important role they play in national development as providers of employment, shelter, food and clothing. Miller (1977) and Adekaye (1983) referred to small-scale farmers as traditional, rural and mostly private or family owned enterprises, which are characterized by low capital, low productivity, meager savings from agricultural investment, thus a vicious cycle of poverty. They are unable to take advantage of any new technology to either create or maintain adequate farm size due to lack of access to fund. They may engage in cropping, livestock production, fishing and forestry.

According to FAO (2003) small-scale fisheries activities supply up to 80% of the fish products for domestic consumption which improves nutrition for the poor and vulnerable and ensures good security in fishing communities. It is believed that fish provide a relatively cheap source of animal protein in the country, especially Bayelsa State. The Bayelsa state population is dominated by


small-scale fish farmers who rnoslly carry out artisanal fisheries in the lakes, rivers, and lagoons. Anibeze (1995) described this sector as capture fisheries and defined it as the hunting and removal of fish and other aquatic organisms from their wild habitat. He referred to them as the major employer of labour in the r$verin©_communities. Kwesmiju (1996) described that in spite of the tremendous contribution of the sector, no proper incentive has been put in place to encourage their performance. They are faced with numerous production problems such as crude fishing crafts and gears, processing and preservation equipment, net and other accessories (Moses, 1992). Small-scale fish farmers need micro-credit to purchase fingerlings, fertilizers, agro-chemicals, payment for labour cost and transportation. Money is also needed to run the day to day transactions in the farming business and to feed the family. Anyanwu and Anyanwu (2003) observed that small-scale farmers are poor and cannot afford to acquire these modern inputs for their production. This is why the small-scale fish farmers need to acquire micro-credit to utilize for their operations. But the access of these farmers to micro-credit is doubting. How these farmers acquire micro-credit for their production activities is a problem.

From the afore-mentioned there is the need to raise the necessary capital for agricultural development among fish farmers. Anyanwu also observed that farmers do not often receive much financial assistance from relations, friends or neighbours as these people are generally poor. Herbert (2001) identifies both informal or non-institutional and formal or institutional credit to farmers. Nweze (1995) refers to informal finance or credit as money from traditional or indigenous arrangement for savings and credits, which often lack legality and are outside any statutory contro. In Nigeria, informal source of credit available to small-scale fish farmers can be divided into financial self-help groups and individual financial self-help associations and other development oriented self help groups in which financial functions are normally secondary (Kropp, Marx, Pramod, Quinones and Se>bel, 1989). The most widespread and most important financial self-help or mutual aid associations are the savings and credit associations (Seibel and Damachi, 1982; Seibel and Marx, 1987; Nweze, 1990). These can also be further divided into rotating and non-rotating associations and association with and without a loan scheme.

Herbert (2001) stated that successive governments in Nigeria recognizing the relevance of credit as a tool in poverty alleviation among farmers, have put in place a number of measures aimed at improving micro-credit to all productive sectors of the economy especially agricultural enterprises. Herbert identified the following institutional or formal micro-credit services in Nigeria:

     Nigerian Agricultural and Co-operative Bank (NACB)

     People’s Bank of Nigeria (PBN)

* Community Banks (CB)

     Family Economic Advancement Programme (FEAR)

     Agricultural Credit Guarantee Scheme (ACGS)

     Rural Banking Scheme (RBS).

Nweze (1995) observed that the formal or institutional credit sources are a very good source of micro-credit but requires collateral which the small-scale fish farmers cannot provide to obtain the loan. However, their interest rates are lower than the informal source of credit. The problem of micro-credit acquisition among small-scale farmers lies on the policies and conditions that the various lending institutions are operating on. Nweze (2001) stated that most institutional financial organizations such as Community Banks, NACB and other commercial banks, require farmers to have a minimum deposit of 10% of the needed credit. Non-institutional financial bodies also require collateral or a guarantor with landed properties which most small-scale fish farmers cannot afford. This frustrates them and makes them go back to their traditional methods of fish farming, since they cannot afford to buy improved varieties of seedlings, fertilizers, agro-chemicals, machinery just to mention a few. According to Ihunodu (1983), it is because of these huddles that the Federal and the various state governments are advising or encouraging small-scale fish farmers to form agricultural co-operatives, thrift and “isusu” clubs as ways of strengthening the credit base of members.

The role of finance is therefore, vital in ensuring the availability of household food in the rural areas where the producers are primarily small-scale farmers whose disposable income for household food supply has not kept pace with the sharp inflation in the country (Tank, 1995). Seibel (2000) stated that improving the micro-credit acquisition and utilization strategies among small- scale farmers and their timely access to credit facilities is a major incentive that stimulates the growth of small-scale fish farmers enterprises. Despite this emphasis on promoting economic growth through provision of credit to small- scale farmers, the problems of obtaining credit especially the lending terms and conditions still limit the accessibility of these farmers to credit facilities. These problems need to be addressed hence this study is aimed at assessing the micro-credit acquisition and utilization among small scale fish farmers in Bayelsa State.


Statement of the Problem

The importance of small-scale farmers (especially fish farmers) in the economic development of Nigeria, especially in Bayelsa State, has manifested in the provision of food, personal income, shelter, clothing, raw materials and others (Tawaih. 2000) A Iucjt 1 percentage ol Ihe Nigerian labour force (75%) engaged in this small-scale farming. These farmers who provide these all important functions are faced with the problem of low capital and need the acquisition of micro-credit to improve their production.

Owing to the Deltaic nature of the terrain of Bayelsa State, there exist several rivers, creeks, lakes and other water bodies in virtually all parts of the state whether Delta or upland. Consequently, fishing activities are carried out by the indigenous population everywhere in the state, fishing is a predominant

Fisheries development implies increase in the fishing effort which naturally calls for increased capital investment in procurement of adequate quantity and quality of fishing inputs. However, low income accruing to small- scale fishermen is a well recognized constraints (Obidozie, 1990 and Okoro, 1990). Thus, fishermen who do not have alternative sources of financing resort

In the past and recent years, various governments in Nigeria embarked on different efforts and programmes aimed at boosting the activities of small- scale fish farmers in particular and agricultural production in general (Nweze, 2001). These programmes were geared towards monetarization of the rural society leading to its transformation from traditional isolation, to integration with national economy. In pursuance of this broad objective, government tried several programmes, approaches and strategies in order to make funds accessible to small-scale fish farmers in the rural areas (Eboh, Okoye and Ayichi, 1995; and Ehigiamusae, 2000). Government also gives encouragement to these small-scale fish farmers to form co-operative societies to improve their financial base but despite these efforts at both Federal and State levels, micro­credit acquisition and utilization among these small-scale fish farmers are still not accessible. Farmers are still found looking for micro-credit to purchase farming inputs and to pay labour. The loan terms and conditions are still not favourable. This study is therefore designed to highlight the problems and prospects of micro-credit acquisition and utilization among small-scale fish farmers in Bayelsa State.

Purpose of the Study

The overall purpose of the study is to access the micro-credit acquisition and utilization strategies of small-scale fish farmers in Bayelsa State. The specific objectives are as follows:

1.                 Identify the micro-credit needs of small-scale fish farmers in Bayelsa State;

2.                 Identify the major sources of micro-credit among fish farmers in the state;

3.                 Determine the terms of micro-credit acquisition, among the farmers;

4.                 Identify the ways of micro-credit utilization among the farmers;

5.                 Identify the major constraints in micro-credit acquisition among the fish farmers;

6.                 Determine strategies for enhancing micro-credit acquisition and utilization among small-scale fish farmers in the state.

Significance of the Study

Generally, it is assumed that rural and small-scale fish farmers, have relatively low income and therefore are unable to repay loan or credit extended to them. Expansion and modernization of their farms depend to a large extent on capital investment, given good management. To obtain capital they must of necessity seek credit from micro-credit finance institution.

The research work would therefore find out how small-scale fish farmers acquire their loans from micro-credits and the strategies that are involved in acquiring these credits.

The findings of this study would also serve as an eye opener to farmers who had not known about these micro-credit financing institutions when the information is made available to them by extension agents.

The lending institution will also gain from the research work since the study will provide useful information on the effect of loans issued to the fish farmers and their level of operation to meet farmers’ demand for improving their productivity and income.

Micro-credit to small-scale fish farmers no doubt, is essential to sustain agricultural production and there is the need for the constant evaluation. The outcome will help to determine their continued existence as the main sources of micro-credit.

Research Questions

The study will answer the following research questions:

1.         What is the micro-credit need of the small-scale fish farmers in Bayelsa State?


2.         What            are the sources of micro-credits available to fish farmers?

3.         What            are the terms of micro-credit acquisition among fish farmers?

4.         What            are the ways of utilizing micro-credit among the farmers?

5.         What              are the constraints of micro-credit acquisition among the farmers

in the   State?

6.           How can micro-credit acquisition and utilization among small-scale fish farmers in the state be enhanced?

The following null hypotheses will be tested at 0.05 level of significance: Hod There is no significant difference in the mean response of the farmers and micro-credit institution on the micro-credit needs of small-scale fish

Ho2:    There is no significant difference in the mean response of the farmers and

micro-credit institutions on the terms of acquiring micro-credit among the. The study is limited to small-scale fish farmers and major micro-credit lending institutions in the state. The study will also be restricted to only Bayelsa Central Senatorial districts.

 

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