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The Impact of Microfinance Credit on Agricultural Productivity in Nigeria



This study was carried out to examine the impact of Micro-finance credit on Agricultural productivity in Nigeria. The study particularly assessed the different uses of micro-finance credit by farmers. Furthermore, the extent of credit accessibility and size of credit was examined. In order to provide precise data and give concise findings, the study was limited to farmers in Otuoke, Bayelsa state. Inclusively, farmers from Oloibiri, Opume, Otakeme and Otuabula were included in this study. The study adopted the survey research design where 284 participants were enrolled in the study after seeking their consent. The researcher complied with the full covid-19 safety measures. Using the Pearson correlation statistics and the t-test statistical tool, the findings from the study revealed that there is a positive significant relationship between micro-finance credit and increase in agricultural productivity, additionally, findings revealed that farmers in Otuoke and other parts of OGBIA local government area of Bayelsa state do access credit financing from Micro-finance banks. The study identified some challenges such as interest rate, long credit process, and delay credit financing. The study strongly recommends government creation and maintenance of a financial infrastructure that supports agricultural credit financing. It should direct prudential regulation and supervision, especially for those institutions handling deposits, demanding information that clarifies the financial performance of banks, thereby ensuring transparency.




1.1 Background to the Study

1.2 Statement of the Problem


1.3 Objectives of the Study

1.4 Hypotheses of the Study

1.5 Research Questions ( if relevant)

1.6 Significance of the Study

1.7 Methods of Data Analysis

1.8 Scope and Limitation of the Study

1.9 Organisation or Plan of the Study

1.10 Definition of Terms ( if necessary)



2.1 Introduction

2.2 Theoretical Literature Review

2.3 Empirical Literature Review

2.4 Summary of the Review



3.1 Introduction

3.2 Research Design

3.3 Population and Sample

3.4 Sampling Technique

3.5 Data and Data Collection

3.6 Methods of Data Analysis

3.7 Sources of Data



4.1 Introduction

4.2 Presentation of Results

4.3 Interpretation of Results

4.4 Discussion and Policy Implications of Findings



5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendations






Background to the Study

In most developed countries, subsistence has been directly or indirectly linked to agriculture. According to the Food and Agriculture Organization (2016), more than 60% of the world’s population rely on agriculture as their main source of livelihood. About 75 percent of the world’s poor live in rural areas, and 86 percent of them earn money in agriculture (ECG, 2011). Maintaining a good crop is important for all of these people. Recently, the growth of agriculture has slowed down. Growth of the world’s essential nutrients is approximately 1% per annum (FAO, 2009a), while the recent growth rate of the world’s population is approximately 1.2%. Land is a rare commodity; Land expansion can not be achieved in many developing countries (ECG, 2011).

As a result, the only solution would be to increase agriculture to meet the future food needs of growing people. Due to insufficient land for arable land and integration, modernization of agriculture in many parts of the world may result in faster-than-large-scale agriculture. grow. Therefore, developing more and increasing strategies and resource savings are important goals as well as diversification (Dixon et al., 2001). The discrepancy between the actual benefits of most crops and the actual crops suggests that there is a greater potential for increased food and crop production through efficiency (Zepeda). , 2001).

The FAO estimates that about 80 percent of growth in food production in developed countries is due to crop production, and that only 20 percent crops of the area (FAO, 2009c). Therefore, significant strikes are important not only to meet the growing demand for more crops, but also to further deforestation, damage to the planet. accidents and global warming. From supplies and needs, recreational farming can play an important role in industry (Johnston and Mellor, 1961). For example, agriculture has provided raw materials to industry and other industries and needs input from the modern world such as research and development. information technology. In terms of demand, high yields can increase the incomes of the rural population and thus increase the demand for local products (Dethier and Effenberger, 2011).

In this way, it has the potential to create a seamless connection between agriculture and modern industry, create new jobs, and improve urban and residential incomes. Additionally, food security is among the challenges facing the world community. Food security refers to the situation when “everyone has to adapt their diet, lifestyle and lifestyle to an active, healthy lifestyle that meets their physical, health and economic needs at all times” (FAO, 2010) Olon. People think of it as a simple human right, but thousands of people all over the world, especially in low-income countries in the food sector, continue to suffer from poverty and hunger (IEG, 2011). Most of these people live in rural areas and rely on agriculture to meet their daily needs and livelihood. In this sense, improving the rural economy is often an important tool for reducing poverty, improving food security and improving rural living through the use of sustainable crops (Pinstrup-Andersen, Pandya-Lorch, 1998).

Another important factor in food safety is longevity. This means that cooking should be done not only for future generations, but also to order. The reality is that the average annual crop growth rate in the world fell from 2.42% in 1974-82 to 1.78% in 1982-90 (Rosegrant et al., 1995).) The leading rate in Asia is 2.62-1.66%, and in China 4-6.%. It shows a similar picture of other crops, such as corn, wheat, sorghum and other staple foods (Pinstrup-Andersen, 1994). Food security and food security benefit from many physical, social, economic and political factors, both nationally and internationally (Chang and Zepeda, 2001). In addition to infrastructure and infrastructure development, there is a need for several key economic sectors, population growth, population change, rapid urbanization, and revenue generation. In terms of support, agriculture can play an important role in supporting world food supply (Rosegrant, etc., 1995).

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 Statement of the Problem

The Nigeria Financial system have put in place policy that enables credit access. The objective is to ensure that farmers have access to credit to carry out their agricultural activities. Financial institutions such as micro-finance banks, commercial banks and the Agricultural Bank of Nigeria have urged them to increase lending to the agricultural sector. One way to do this is to evaluate whether the activities of the credit unions have responded to the analysis of the farmers involved in the credit market. The cultivation of various agricultural products, such as rice, requires high fees to cover the cost of cultivation during the growing season.

Therefore, the micro-finance credit plays an important role in increasing agriculture (Iqbal, Munir and Abbas 2003). The importance of credit for small farmers in agricultural productivity cannot be denied (Siddiqi et al., 2004). The availability of credit services can help expand the technological development of agriculture, which can increase incomes.

Credit financing have played an important role in improving agriculture before planting and harvesting (Akpokodje, Lançon & Erensten, 2001); Therefore, it is very important that farmers receive income and credit on time, as argued by Saboor, Hussein and Munir (2009), to obtain the tools, raw materials and labour necessary for agriculture. Loans should be necessary not only for agriculture, but also for family consumption, especially during non-planting season. According to the National Bankruptcy Reform Commission (NAP), the Nigerian Agricultural and Cooperative Bank (NACB) is developing special loans to improve agricultural production. The number of loans for cereal production under the program increased from 3,000 in 1989. Up to 5,780 loans approved (Akpokodje, Lançon & Erensten, 2001).

To improve the situation, the government has implemented measures such as the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), including the 2009 inveinvstment to increase productivity in Agriculture. Hence, this study is therefore carried out to assess the impact of micro-finance credit on Agricultural productivity in Nigeria.

 Objectives of the Study

The aim of this study is to assess the impact of micro-finance credit on the productivity of the agricultural sector. Specifically, the study seeks to:

  1. Determine the impact of micro-finance credit on agricultural production in Otuoke.
  2. Assess the level of credit accessibility by farmers in Otuoke.
  3. Examine the size of credit financing received by farmers.

 Hypotheses of the Study

The following null hypotheses was developed and tested in this study

H01: There is no positive relationship between micro-finance credit and increase in agricultural productivity.

H02: Farmers in Otuoke do not have access to micro-finance credit.

Research Questions

The following questions provides a guide to the study:

  1. How often do farmers access credits for Agriculture from micro-finance banks?
  2. In what ways has the micro-finance credits benefited farmers in Otuoke?
  3. What are the perceived challenges encountered by farmers in accessing credit services from micro-finance banks?

 Significance of the Study

Micro-finance credit services specifically government-funded have adopted a traditional soft lending approach, mainly targeting the agricultural sector and other non-agricultural activities. However, the consequences were short-lived. The Nigerian economy can reap greater benefits if concrete measures are taken to save the agricultural sector.

For the researcher, this work will be an opportunity for increased knowledge. To the farmers in Otuoke, they will better understand the opportunity provided by the micro finance banks to help increase their agricultural inputs.

To the policy makers, the challenges and findings identified in this study will aid in developing policies aimed at increasing agricultural production and funding programs in Bayelsa state and more so in Nigeria. This study should not be seen as the end of research and decision making, but rather as a guide that takes into account its limitations.

Methods of Data Analysis

This study is a quantitative type of study and will adopt the Pearson correlation analysis to determine the relationship between micro-finance credit and increase in agricultural produce in Otuoke. Responses from the survey will be analysed using the chi-square statistical tool to test determine if farmers in Otuoke have access to credit facility provided by Micro-finance banks.

Scope and Limitation of the Study

This study intends to accommodate data and views on farmers in Nigeria and Agricultural productivity in Nigeria. However, due to inaccessibility of some information and in order to present precise and concise findings, this study will be limited to farmers in Otuoke, Bayelsa state and the activities of micro-finance banks in Bayelsa state.

Organisation or Plan of the Study

This study will be carried out in five chapters. Chapter one explains the research problem, objectives for the study and the formulated null hypotheses. Chapter two reviews related literatures, builds a theoretical framework and reviews some empirical works. In chapter three, the methods and approach adopted for this study is explained. This includes the data collection method and the statistical tool. Chapter four presents the data collected and analyses this data for meaningful interpretation. In the fifth chapter, a findings from the previous chapter were reiterated. A summary for the study is ensured and a conclusion is reached.

 Definition of Terms

Agriculture: This in this study refers to all farming activities undertaken by individuals or groups for individual or commercial reasons.

Productivity: In this study refers to the various output achieved thriugh the labour or machinery applied by farming individuals or groups.

Micro finance credits: This refers to loan services granted by micro-finance banks for agricultural activities.

Otuoke: This refers to the place of study.



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