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The study analysed the effects of micro-credit on rice production among rural farmers of Izzi Local Government Area of Ebonyi State. Combinations of multi-stage random and purposive sampling techniques were used in selecting a total of 120 respondents for the study. Primary data used for the study were collected with the aid of structured questionnaire that was administered to the sampled respondents. Both descriptive and inferential statistics were used to analyse data collected. The result of the socio-economic characteristics indicated a mean age of 29 years and that majority (61.7%) of them were male. Also most (56.7%) of the respondents were married with an average household size of 7 persons. Again, the educational qualification shows that majority (63.3%) of the rice farmers had acquired various forms of formal education. The rice farmers earned a mean annual income of N330, 833.3 from the combined occupations of farming and trading (70%). It was also observed that most (43.3%) of the respondent cultivated between 0.6 to 1.0 ha of farmland in the study area. Furthermore, the various types of formal micro-credit institutions existing in the area were: microfinance bank (100%), Ministry of Agriculture (91.7%), and registered cooperatives (65.0%). It was also observed that majority (56.7%) of the respondents obtained loan from microfinance, whereas few (5%) of them obtained loan from commercial banks. The result further indicated the sum of N137,200 was observed as the mean difference between the mean amount (N291,500.0) of loan applied and the mean amount (N154,300.0) obtained by the rice farmers. The result of simple regression analysis shows coefficient of determination (R2) value of 0.873 or 87.3%, impling that 87.3% of the total variation observed in the amount of micro-credit obtained was attributable to changes in the rice output. The coefficient amount of micro-credit obtained (X1) was positively signed as well as statistically significant at 1%. The result of the multiple regression analysis indicated that the coefficients of age, educational level, household size, cost of production, and net farm income were positively related to amount of micro-credit obtained for rice production in the area, whereas sex, age, educational level, farming experience, and interest rate were significant at 1% level. The study identified institutional and economic constraints as factors that constrained micro-credit acquisition for rice production among rural rice farmers in the study area. The test of hypothesis shows that the socio-economic characteristics of the rice farmer have significant effects on micro-credit obtained for rice production in the area. The study recommends the establishment of formal micro-credit institutions in rural areas where bulk of the farmers live. Also, the Central Bank of Nigeria should ensure that interest on agricultural loan is charged within one digit, and again there should be stringent monitoring and supervision of credit schemes to ensure the funds get to the end users (farmers).



  • Background of the Study

Agriculture is an important sector in the economic development and poverty alleviation drive of many developing countries including Nigeria. It is the main thrust of national survival, employment, food and foreign exchange earnings (Adebayo and Okuneye, 2005). Thus, it is on this note that Adebayi and Adekunmi (2005), argued that the role agriculture has played in industrialized countries in the world cannot be over emphasized.

Nevertheless, irrespective of the extension role played by the oil sector of the economy, agriculture still occupies a strategic position in Nigerian economy. This is because agricultural sector is the pivot of all other sectors of the economy, especially the developing economies (FAO, 2006). In Nigeria, the above ascertion is particularly true as food production increased at the rate of 2.5%, food demand increases at the rate more than 3.5% due to population growth rate of 2.8% who are mainly small holders (FOS, 1996).

This is irrespective of the fact that agriculture occupies a priority status in Nigeria for the majority of population who are small holders, who engaged and depend on agriculture for their livelihood and survival. Agriculture therefore serves as a key driver of growth, wealth creation, poverty reduction and so on for large population who are poor (Mbam, 2010).It is also imperative to note that despite the importance of agriculture in the growth and development of Nigeria economy, the sector is still heralded with numerous problem among which is lack of finance especially micro credit to finance most of the agriculture investment which are mainly small scale in nature.  

However, it is on this move to scale the problem of micro-credit that the successive government of Nigeria initiated various policies, schemes and programmes. Some of these policies and programmes are the establishment of; Nigerian Agricultural co-operative Bank (NACB) in 1973, now Bank of Agricultural (BOA), Agricultural credit guarantee scheme (ACGS)1977,Operation Feed the Nation(OFN) in 1976, National Agricultural Food Production Programme (NAFPP), Community Banks now Microfinance Banks, Agricultural Credit Support Scheme (ACSS), National Agricultural Insurance Company (NAIC), the establishment of the defunct marketing commodity storage Boards in 1978, the University of Agriculture in 1988, the National Directorage for Employment (NDE), in 1990s and Agricultural Development Programmes (ADPs) in the Nineties which are microfinance based in 2005.

These policies, Schemes and programmes are therefore for special interest in the accelerating processes of rural community transformation by various ways in the areas of poverty alleviation, provisional of rural infrastructure, agricultural extension, and in the development of microcredit establishment that will affect the lives of the rural investors and community organizations among others by 2020.

Furthermore, access to credit could be dependent on location of banks, farmer’s attitude as regard to loan default, high interest rate, collateral and short term nature of the loans (Adeniyi, 1987). Thus as these financial series usually involve small amount of money, small loan, small savings and so on. Micro-credit literally means small and finance investment or support. Microcredit is a term used to differentiate methods for giving poor people access to financial service Irobi (2008),defined microcredit as the provision of financial service such as credit (loans), savings, micro-leasing, micro-insurance and payment transfers to economically active poor and low income household to enable them engage in generating activities or expand/grow the small businesses.

Microcredit is basically a tool design to improve the capacities of the economically active poor to participate in the large economy. Thus, the economically active poor are either micro entrepreneurs who operate in the informal sector (trading, farming, catering, craftsmanship and artisanship) or people earning wages. Anyanwu (2004), however noted that before the emergence of formal microcredit institutions, informal microcredit activities have flourished all over the country.

(CBN, 2000) reported that informal microcredit provided by traditional groups that work together for the mutual benefits of their members through the provision of savings and credit services. Thus, they operate in Nigeria under different names such as Isusu or Ususu, Etoto, Adashi etc. Rice is from the family, Gramineae, Genus, Oryza and species: sativa L and Glaberrina it was taken to West Africa in early 19th century (Jirgi, Abdurrahman and Ibrahim, 2009).

Rice is the staple food for about half of the human race. It is the leading cereal crop which can be grown in the standing water areas of flat, low lying tropical soils. According to (WARDA, 2003), the projected growth in rice consumption in Nigeria is as high as 4.5 percent per annum; Also Akande (2002), argued that rice is an staple food for more people than any other crop and 90% of it is grown consumed in south east Asia which is a major centre of this world population.

It is an increasingly important crop in Nigeria, thus, it is grown both for sale and home consumption. Imolelin and Wada (2000) reported that rice is known as one of the major cereals and has assumed cash crop status in Nigeria, especially in the production areas, where it produces employment and income for more than 80 percent of the rural farmers as a result of the activities that take place along the production and distribution chains from cultivation and consumption.

However, due to its increasing contribution to per-capital calorie to Nigerians, the demand   force has been increasing at a much faster rate than in any other African countries since 1970’s (WARDA, 2001).Moreover; both rice production and its consumption or demand is growing faster than any other major staples. This is because of its consumption classes and thus, the primary source of income for the rural farmers in Izzi Local Government Area of Ebonyi State.

Meanwhile, rice production system is beset with problems associated with poor access to credit/capita base, low-labour output, low yield, and relatively high production costs of labour, poor acquisition of land, poor producer price and marketing system. In line with this, Adeniyi (1987), observed that related problems of that nature have led to the low yield and hence the decline in the local production of this crop by rural farmers.


  • Problem Statement

In Nigeria, rice production is one of the fastest growing agricultural sub-subsectors, and has moved from a ceremonial to a staple food in many Nigerians homes such that some families cannot do without it in a day (Boris, 2004). However, with the expansion of cultivated land area of rice, there has been as steady increase in the production and its consumption. Through is a major staple food in Nigeria but its domestic production has never been able to meet demand (FAO, 2006).

It is on this note that (Erenstein, Akpokodje, Frederic, Akande and Ogundele, 2003) observed that the demand and supply gap in rice production is widening, resulting in huge import bill on rice. However, despite the effort by successive Governments of Nigeria in encouraging farmers to embark on the rice production, its productivity and growth are still hindered by limited access to agricultural inputs especially finance in form of credit.

On this note, it has resulted in the declining performance of the nation’s agricultural sector especially in rice production (Rahji and Fakayode, 2009). There is therefore, need in accelerating processes of rural farmers transformation by various governments in the area of poverty alleviation, provisional of rural infrastructure, agricultural extension and in the development of micro-credit establishments that will enhance rural farmer’s livelihood in Nigeria at large and the study area in particular.

It is however unfortunate that inspite of the numerous banks established to promote agricultural credit in Nigeria, there is still dearth of empirical information on the rural farmers’ access micro-credit in the study area. Thus, the scope of their effectiveness has not been scientifically ascertained. Hence, the attendance knowledge gap has not permitted the formulation of articulate policies for improvement, even though there were moves to popularize micro-credit in Nigeria with the introduction of the agricultural credit guarantee scheme in 1970 which aimed at sensitizing banks on the need to make loans accessible to micro-business (Majela and Ifenkwe, 2007). This witnessed the establishment of specialized credit institutions and policies to encourage the regular banks to establish more rural branches.

  • Objective of the Study

       The broad objective of the study is to assess the Effects of Micro-credit on Rice Production among Rural Farmers of Izzi Local Government Area of Ebonyi State.

       Specifically, the objectives are to;

  1. describe the socio-economic characteristics of the rural rice farmer who accessed micro-credit in the study area;
  2. identify the formal micro-credit institution and the amount of loan obtained from those institutions for rice     productivity;
  • determine the effects of t micro-credit obtained on the rural rice farmers’ output in the area;
  1. determine the effects of the socio-economic characteristics       on micro-credit obtained for rice      production;
  2. identify the constraint to micro-credit acquisition for rice production by the rural rice farmers of Izzi L.G.A of Ebonyi    state;
    • Hypothesis

       Ho,: micro-credit has no significant effect on rural farmers socio-economic characteristics in rice production.

  • Justification for the Study.

 Micro-credit is often seen as the several credit vehicles used to access credit for agricultural transactions including loan notes, bills of exchange and bankers acceptance, thus serves as a catalyst that activates other factor of production and makes under-used capacities functional for increased production (Ijere, 1998). Over the year, micro-credit has been emerged as an effective strategy for poverty alleviation which is a very important aspect of the Millennium Development Goals (MDGs) (Iganiga, 2008).

However, findings of this study will serve as a source of information on the operations of micro-credit institution in the study area, it will be of immense important to the Government, policy makers, entrepreneurs, credit institution, farmers and other stakeholders in taking decision that will lead to the growth development of the state, Ebonyi and the study area in particular.

Moreover, the study will contribute to the body of knowledge, providing solution to the problems of low productivity in rice production sector in Nigeria and positively will contribute towards the achievement of self-sufficiency of food and consumption in the country.

This research will also help to encourage many rural farmers to engage acting in rice production since, it will be guaranteed through the formulation of policies that would ensure credit availability and accessibility in the study. It will also discourage migration of rural dwellers to urban areas in search of white collar jobs and other curricular activities.

Furthermore, this research will help to validate and revalidate other existing literatures in the area of micro-credit procurement in agricultural productivity especially in rice production in the study area. It will also help to tackle most of inherent problems in micro-credit, loans/services in rice production in the study area.


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