AKSU Journal of Agricultural Economics, Extension and Rural Development

MICROCREDIT PARTICIPATION AND POVERTY REDUCTION AMONG ARABLE CROP FARMING HOUSEHOLDS IN TWO AGRICULTURAL ZONES IN AKWA IBOM STATE, NIGERIA

Author:  Nkeme, K. K., Bassey, N. E and Nelson, U. F.

Abstract
This study examined the effect of microcredit participation on poverty reduction among a sample of 120 arable crop farmers selected through a multi-stage random sampling in Abak and Uyo Agricultural Zones, Akwa Ibom State, Nigeria. Data collected with the aid of a questionnaire were analysed using descriptive statistics, Mean Per Capital household Consumption Expenditure, Foster, Greer and Thormbecke (FGT) model and the Logistic regression model. Findings revealed that majority (62.5%) of household heads were male and were married (84.2%). Findings also revealed a mean age, household size, education and farming experience of 43 years, 4 persons, 13 years and 11 years, respectively. The major sources of microcredit were: cooperative (31%), money lenders (19%), micro finance, (14.3%), others (10.7%), NGOs (8.3%) and religion/ charismatic societies (4.8%). Result of the poverty status showed that about 45 percent of sampled households were poor while 55 percent were non poor. Of a total of 54 poor households, 35.2 percent were microcredit participants while 64.8 percent were non- participants. Result of the FGT model yielded a Head count ratio of 0.3114 and 0.5823, Poverty gap ratio of 0.1361 and 0.2824 and severity of poverty of 0.0352 and 0.062 for micro-credit participants and non- participants respectively. The differences in the three estimated poverty indices between both groups of households showed that in the absence of microcredit participation, about 27.69 % more individuals was thrown into poverty while an average individual will require additional 14.63% income transfer to bring them to the poverty line. The differences in severity index showed that about 2.68% more individuals suffer severe poverty. Result of the Logistic regression analysis revealed that gender of household head, annual income and participation in microcredit significantly reduced poverty status of households at 10%, 5% and 10% levels, respectively while farm size and educational level significantly increased poverty status respectively at the 5 and 10% levels. The major constraints to microcredit participation in the study area were: high interest rate (23.76%), lack of guarantors (21.3%), short repayment period (17.8%), low loan volume (5.4%), lack of collateral (8.9%), insufficient grace period (8.2%) and stringent application procedure (4.7%). Keywords: Microcredit, Participation, Poverty reduction, logit regression.