CHAPTER ONE
INTRODUCTION
1.1 Background Of The Study
Credit
is the transaction between two parties in which the creditor or lender supplies
money, or goods and services or securities in return for promised future
payments by the debtor or borrower. It also refers to money that a bank or
business will allow a person to use and then pay back in the future. In
economics and finance, credit is a contractual agreement whereby a borrower
receives something of value now and agrees to repay the lender at some date in
the future, generally with interest. Micro is defined by Horroby (2001) as
small or small scale. Adekaye (1983) referred to small scale fish farmers as
traditional, rural and mostly private or family owned enterprises, which are
characterized by low capital, low productivity, Meager saving 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 funds. They may engage in cropping, livestock production,
fishing and forestry.
According
to FAO (2003) small scale farm activities supply up to 80% of the food products
for domestic consumption which improves agricultural activities in the country,
especially Bayelsa State. The Bayelsa State population is dominated by small
scale fish farmers who mostly carry out subsistence agriculture activities.
Ambeze (1995) described the sector as a sector that deals with small scale, the
sector as a fisheries, lumbering, farming etc. and defines it as the hunting
and removal of fish and aquatic organism from their wild habitat. He refers as
the major employer of labour in the riverine communities.
Kwesiniju
(1996) described that in spite of the tremendous contribution of the sector, no
proper incentive has been put in place to courage their performance. They are
faced with numerous production problems such as fishing crafts and gear,
processing and preservation equipment’s, net and other accessories (Moses 1992)
small scale fish farmers need micro credit to purchase fingerlings, fish feeds,
fertilizers, agro-chemicals, payment for labour cost and transportation. Money
is also needed to run the day to day transaction in the fish farming business
and to feed the family.
Anyanwu
and Anyawu (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 operation.
But the access of these farmers to micro-credit
is uncertain. How these farmers acquire micro-credit for their production
activities is a problem? From the aforementioned there is the need to raise the
necessary capital for agricultural development among 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 or formal or institutional
credit to farmers.
Nwezer
(1993) refers to informal finance or credit as money from traditional or
indigenous arrangement for saving and credit which often lack legality and are
outside any statutory control in Nigeria, informal source of credit available to small scale farmers can be
divided into financial self-help groups and individual financial self-help
association and other development, oriented self-help groups in which financial
functions are normally secondary (Kipp, marxPrumid, Quinones and Sehel, 1989).
The most wide spread and most important financial self-help or mutual
associations are the saving and credit association (Seibel and Damachi, 1982,
Seibel and Marx, 1987, Nweze, 1990).
Herbert
(2001) stated that successive government in Nigeria recognizing the relevance
of credit as a tool in poverty
alleviation among farmers, have put in place a number of all productive
sectors of the economy especially agricultural enterprises. Herbert (2003) also
identify the following institutional or formal micro-credit service in Nigeria
Nigerain
Agricultural and Cooperative Bank (NACB)
People’s Bank of Nigeria (PBN
Community Bank (CB)
Family Economic Advancement Programme (FEAP)
Agricultural Credit Guarantee Scheme (ACGS)
Rural Banking Scheme (RBS)
1.2 Statement of the Problem
The
importance of small scale 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 other. Larwaih (2000), a huge
percentage of the Nigeria labour force (15%) are 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, farming activities are carried out by
the indigenous population everywhere in the state. Farming is a predominant
occupation of the people.
Farming
development implies increase in the cultivation activities which naturally
calls for increase capital investment in procurement of adequate quantity and
quality of farming inputs; however, low income accruing to small scale fish
farmers is a well-recognized constraint (Obidoze, 1990 and Kuro, 1990). Thus
fish farmers who do not have alternative sources of financing resort to
borrowing in the form of credit. In the past and recent years various
government 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 funding of the rural society leading to its transformation from
traditional isolation, to integration of this broad objectives, government
tried several programmes approaches and strategies in order to make funds accessible
to small scale fish farmers in the areas (Eboh-Okoye and Ayichi, 1995, and
Ehigiamugae, 2000). Government also gives encouragement to, these small scale
fish farmers to form cooperation societies to improve their financial base but
despite these efforts at both Federal and State levels, micro-credit
acquisition and utilization among these small scale fish farmers still not
accessible. Fish farmers are still opting for micro-credit to purchase
fingerlings, fish feeds, Land or tanks and to pay labour and carriage (i.e.
cost of transporting goods) the loan terms and conditions are still not
favourable. The following areas of problem shall be looked into: micro-credit
needs, acquisition, utilization sources, strategies, terms and conditions of
loan among small scale fish farmers are the specific areas of the problem the
researcher wish to concentrate in this study.
1.3
Purpose of the Study
The
overall purpose of the study is to access the credit acquisition and
utilization strategies of small scale fish farmers in Sagbama Local Government
Area of Bayelsa State. The specific objectives are as follows
i.
To identify the micro-credit needs of
small scale fish farmers in Bayelsa State;
ii.
To identify the major sources of
micro-credits among small scale fish farmers in Bayelsa State.
iii.
To determine the terms of micro-credit
acquisition among small scale fish farmers in Bayelsa State.
iv.
To examine the ways of micro-credit
utilization among small scale farmers in Bayelsa State.
v.
To identify strategies for enhancing
micro-credit acquisition and utilization among small scale fish farmers in the
State.
1.4Research Question
The
study will answer the following research questions;
i.
What are the micro-credit needs of the
small scale fish farmers in Bayelsa State?
ii.
What are the major sources of micro
credit available to small scale fish farmers in Bayelsa State?
iii.
What are the terms and conditions of
micro-credit acquisition among small scale fish farmers in Bayelsa Sate?
iv.
What are the ways of utilizing
micro-credit among small scale fish farmers in Bayelsa State?
v.
What are the constraints of
micro-credit acquisition among small scale fish farmers in Bayelsa State:
1.5 Research Hypothesis
Given
the nature of this research work there is need to formulate a reasonable
hypothesis
HO:
micro-credit
is not significant in the operation of small scale fish farmers in Bayelsa
State
1.6Significance of the Study
Generally,
it is assumed that rural and small scale fish farmers have relatively low
income and therefore unable to repay loan credit extended to them. Expansion
and modernization of their farmers depend to a large extent to capital
investment, given good management to obtain 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
finding of this study would also serve as an eye opener to fish 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 again from the research work since the study will provide useful
information on the effort of bans issued to the small scale 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 fish production
and there is the need for constant evaluation. The outcome will help to
determine their continued existence as the main sources of micro-credit.
1.7 Scope of the Study
The
scope of this study shall cover the role of credit facilities to small scale
fish farmers in Sagbama Local Government Area of Bayelsa State. This study
shall encompass the nature, the structure and availability of credit facilities
as well as measurement of relative accessibility to small scale fish farmers in
Nigeria at large.
1.8 Justification of the Study
The
concern of credit facilities as a factor input has been amplified by different
experts and government itself has the potential opening new doors of
opportunities in the development of small scale fish farmers in Nigeria.
There
are few studies on the subject of small farm credit and now their
socio-economic characteristics influence their decision about whether or not to
take credit. The development of the sectors is not feasible if and avenue of
credit facilities is not provided. Therefore this research work is directed at
providing insight into this less Studies dimensions in agriculture by eliciting
and analyzing small scale fish farmers in Sagbama Local Government Area of
Bayelsa State, Nigeria.
1.9 Definition ofTerms
For
the purpose of clarity, the researcher defined the following terms
operationally:
(i)
Chi- Square: is a statistical technique
employed in testing a hypothesis concerning the difference between a set of
observed
(ii)
Micro-credit: is a considerable amount
of money a Bank or Business unit allows a person to use and then pay back in
the future.
(iii)
Micro means small or small scale
(iv)
Hypothesis: is a statement of the
expected relationship between independent and dependent variables in the study.
(v)
Collateral security: is a valuable
property that one promises to give if he/she cannot pay back money borrowed.
REFERENCE
Abalu, S.M Press and Etuk, R.E (1983)
practical Management: finance for small scale farmers. London: Mac Donald and
Evans Ltd.
Adekaye, E.F (1983) Accessibility
Constraints of small –scale fish farmers, American Agricultural Research
Journal, 33:655- 689.
