ACCESSIBILITY OF MICROFINANCE SERVICES AND ITS IMPLICATION ON
TECHNICAL EFFICIENCY AMONG CASSAVA FARMERS IN KOGI STATE, NIGERIA
David, A. M. and C. U. Okoye
Department of Agricultural Economics, University of Nigeria, Nsukka
Journal of Applied Agricultural Research 2010, 2: 11-19
© Agricultural Research Council of Nigeria, 2010
This study examined the accessibility of microfinance services and its implication on technical efficiency among cassava farmers in Kogi State, Nigeria; using cross-sectional data. The study used dual stage random sampling techniques for the selection of 120 cassava farmers in the state. Descriptive statistics such as percentages and mean as well as stochastic frontier analysis were used to analyze the data in this study. Seven microfinance services were identified to have been rendered to cassava farmers in Kogi State. One hundred percent (100%) of the Clients of the Microfinance Institutions (CMFI) who were cassava farmers had access to microfinance services like microcredit, savings mobilization, training and advisory services as well as group/cooperative formation. Meanwhile, 69%, 39%, 43%, and 13% of the respondents had access to insurance policy, skill and entrepreneurship development, financial managements, and Information and Communication Technology (ICT) respectively. Fifty one percent (51%) of the CMFI processed microcredit for between 3 – 4 months. Furthermore, 35% of the CMFI spent N4,001.00 – N 6,000.00 to obtained microfinance services. Seventy one percent (71%) of the CMFI obtained services at interest rates of between 0% -8%. 38% of the respondents were able to obtain a total loan of between N 161,000.00 – N 240,000.00. Also, 46% of the respondents were able to repay above 90% of the total microcredit borrowed. Fifty seven percent (57%) of the CMFI used all the microcredit obtained for cassava production, while 43% of the CMFI diverted part of their loans for other uses. The analytical estimation results showed that the technical efficiency of CMFI ranged from 0.103 to 0.987 on the scale of 1.00 with a mean of 0.676. Amount of microcredit used, access to insurance policy and level of access to microcredit were statistically significant at 10% level. In addition, the signs of amount of microcredit used, savings mobilization, training and advisory services, group/cooperative membership,
age, farming experience, family size, and formal education were consistent with the a priori expectation for CMFI cassava farmers. The study, therefore, recommends Public Private Partnership (PPP) between the government and microfinance institutions (MFIs), ICT based microfinance services, mechanical services, affordable processing cottage industries, training centers as well as other incentives. More cassava farmers should be encouraged to join group/cooperative, so as to facilitate their access to microfinance services. Insurance policy should be decentralized and allow to trickle-down to the rural communities.