Does institution type affect access to finance for cassava actors in Nigeria?

The cassava system in Nigeria is developing, with increasing attention to its potential positive outcomes. However, credit access is a major problem in expanding productive activities of the different actors across the value chains of cassava products. This study investigates the extent of access to credit by cassava actors with respect to the different financial institutions in the country using data obtained from a sample of 168 actors, including producers, processors, marketers, fabricators and end users. The study found that commercial banks had the highest disbursement rate (88.0%) despite higher interest rate charged, while government banks had the least (73.6%). Processors (79.5%) and marketers (79.4%) had highest credit access rate while fabricators (67.5%) had the least. Regression results revealed that cassava actors that patronized commercial banks particularly those who are medium scale had access to higher amount of credit. However, female actors and those using cooperative banks secured lower credit amount. In line with the results, Nigeria should champion private-sector-led credit provision through appropriate policies aimed at improving the capacity of the institutions. Financial institutions should be strengthened for better credit access by the cassava actors, and hence improve their productivity

Smallholder agroprocessors' willingness to pay for value-added solid-waste management solutions

Open Access JournalThe paper examined the willingness of smallholder cassava processors to pay for value-added solid wastes management solutions in Nigeria. We employed a multistage sampling procedure to obtain primary data from 403 cassava processors from the forest and Guinea savannah zones of Nigeria. Contingent valuation and logistic regression were used to determine the willingness of the processors to pay for improved waste management options and the factors influencing their decision on the type of waste management system adopted and willingness to pay for a value-added solid-waste management system option. Women constituted the largest population of smallholder cassava processors, and the processors generated a lot of solid waste (605–878 kg/processor/season). Waste was usually dumped (59.6%), given to others (58.1%), or sold in wet (27.8%) or dry (35.5%) forms. The factors influencing the processors’ decision on the type of waste management system to adopt included sex of processors, membership of an association, quantity of cassava processed and ownership structure. Whereas the processors were willing to pay for new training on improved waste management technologies, they were not willing to pay more than US$3. However, US$3 may be paid for training in mushroom production. It is expected that public expenditure on training to empower processors to use solid-waste conversion technologies for generating value-added products will lead to such social benefits as lower exposure to environmental toxins from the air, rivers and underground water, among others, and additional income for the smallholder processors. The output of the study can serve as the basis for developing usable and affordable solid-waste management systems for community cassava processing units in African countries involved in cassava production

SOURCES OF FINANCE FOR MICRO, SMALL AND MEDIUM ENTERPRISES IN NIGERIA

Initial attempts of developed and developing countries to eradicate poverty focused on the development of large scale industries, based on the traditional economy of scale theory. However, the economic downturn that followed the collapse of the world oil market in 1980s and the financial crisis in Asia in the 1990s brought to fore the important role of Micro, Small and Medium Enterprises (MSMEs) in industrial and economic development in any given country. It has been recognized that among the constraints to effective development of MSMEs in Nigeria is the limited access of the investors to long term credit. Various credit initiatives have been instituted in the past to improve the access of MSMEs to long term funds. Analysis carried out in this study showed that commercial banks loans constituted over 90 percent of sources of funds to MSMEs in Nigeria and their loans and advances to agriculture and manufacturing sectors combined(where the MSMEs are dominant) grew from N83.40million in 1970 to N1,129,158.30 million in 2009 and averaged N149,106.08 million per annum thereby constituting 17.81% of total commercial banks loans and advances to the Nigerian economy on the average between 1970 and 2009, whereas the MSMEs currently contribute about 50% to the nation’s Gross Domestic Product. Furthermore, the survey results indicated that MSME operators still do not have enough funds for their operations as a frequency analysis indicated that inadequate fund/working capital was the most mentioned problem with a percentage share of 60.7%. In view of the assured role of MSMEs in economic development and poverty alleviation, it is recommended that all the funding apparatus directed at the MSMEs in Nigeria, be sustained and intensified

Preferences of micro, small and medium scale enterprises to financial products in Nigeria

Micro, small and medium enterprises (MSMEs) are companies whose headcount or turnover falls below certain limits. The definitions change over time and depend, to a large extent, on a country’s level of development. In both developed and developing economies, there are evidences of the immense contributions of MSMEs to economic growth and development. It has been recognized that among the constraints to effective development of MSMEs in Nigeria is the limited access of the investors to long term credit. Consequently, various funding initiatives have been instituted. However, the MSMEs are still complaining of inadequate funds. Hence, this paper set out to determine the preferences of MSMEs to financial products in Nigeria so as to adequately target them. Survey results indicated that 75.7% of the respondents relied mostly on own funds to finance their businesses, the frequency analysis indicated that inadequate fund/working capital was the most mentioned problem with a percentage share of 60.7% followed by the problem of poor power supply/inadequate infrastructure which took 55.7%. It was therefore, not surprising that 86.1% of the respondents would want the Small and Medium Enterprises Equity investment Scheme to continue. However, 64.7% would prefer loan so they can be in full control of their businesses, while only 15.7% preferred equity. It was recommended that credit programmes that will take cognisance of the peculiarities of MSMEs in Nigeria be intensified so as to increase their access to funds in view of their dominance and potential contribution to the economy

Effect of Deposit Money Banks' Credit on the Performance of Micro, Small and Medium Enterprises in Nigeria

This paper set out to empirically evaluate the effect of deposit money banks' credit on the performance of MSMEs in Nigeria, with the aid of a vector autoregression and error correction mechanism (ECM) technique. Results of the empirical investigation confirmed credit had a positive effect on GDP of MSMEs in Nigeria as the coefficient of CAM (credit to MSMEs) was positive (1.0569) and significant at 1.0 per cent level. It was, therefore, recommended that every effort should be made to improve access to credit by MSMEs, so that they could play their potential roles of employment generation and wealth creation and move the majority of the entrepreneurs out of poverty

Effect of Micro-Credit on Welfare of Small Scale Entrepreneurs in Nigeria: A Case Study of Oyo State

The study evaluated the effect of microcredit on small scale entrepreneurs in Oyo state, Nigeria and its implication on their welfare. Primary data were collected with the aid of well-structured questionnaire. Multi-stage sampling technique was adopted in selecting 200 respondents comprising agriculture and non-agriculture small businesses within Ibadan metropolis. The data collected were analyzed using descriptive statistics, Foster Greer Thorbecke and binary logit regression. Results of analysis of respondents' access to credit revealed that more than two-third (69%) of the respondents did not have access to microcredit while only 31% had access to microcredit. On the implication of micro-credit access to welfare of the respondents, the study revealed that poverty incidence was higher (P0=0.4876) among respondents that did not use microcredit than those with access (P0=0.4419). This suggests that incidence of poverty declines with access to microcredit but this is only by a small percentage of about 5%. Similar to the result of poverty incidence, respondents who did not use microcredit had the highest (P1=0.1104) poverty gap. However, the severity of poverty index among respondents with access to microcredit was higher (P2=0.0359) than those without access (P2=0.0352). The study recommends that strategic policies should be set up to mitigate factors that inhibit access to micro-credit by small scale entrepreneurs as the study showed that access to microcredit is necessary for small business growth and for improving welfare. Such policies should target the economically active age group of small-scale entrepreneurs, improving their literacy levels, and encouraging their ownership of account with lending institutions such as micro-finance bank of choice

Government Policy, Agricultural Output and National Saving in Nigeria

The study examined the role government policy and agricultural output play in national saving in Nigeria, time series data on national savings, agricultural GDP, government policy–related variables as well as other relevant socio-demographic variables were sourced for the period of 1981 – 2012 and analyzed. The Augmented Dickey-Fuller (ADF) test for stationarity, the trace and maximum Eigen statistics for cointegrating vectors as well as the cointegration regression were used at various stages for the analysis. It was found that government’s recurrent expenditure, money supply and population all positively affect national saving. On the other hand, debt servicing by the government, unemployment rate and importation of goods all showed negative relationships with national saving. It was thus recommended that government recurrent expenditure which empowers the populace economically should be given priority during national budget implementation, that unnecessary contraction of money supply should be avoided within reasonable inflation limits, that unrestrained borrowing as well as corruption, which prevents funds borrowed by the government from achieving their objectives thus making servicing of loans burdensome to the economy, be checked. Furthermore, it was recommended that local production of goods and services be supported to prevent excessive importation and the attendant devaluation of the Naira. Finally, it was recommended that employment generation through government expenditure which stimulates local production by the empowerment of the youth and the promotion of infant industries must be prioritized so that the Country’s teeming population can be converted into a work force that will be a driver of economic growth. Key words: government policy, agricultural output, national saving, time serie

Effect of Currency Fluctuations on the Economic Growth Potential of Nigeria

The exchange rate is one of the most important determinants of a country's relative level of economic health. This study examines the effect of currency fluctuations on the economic growth potential of Nigeria using the World Bank Development Indicators data from 1970-2012. The study through the Augmented Dickey Fuller (ADF)/ unit root test found that the variables used in the model are integrated of the order one while export and interest rate are integrated of the order zero. Using the Johansen co integration tests shows the presence of long run relationship between variables. The Error Correction Model (ECM) results suggest that exchange rate has a negative significant impact on GDP in the short run and long run. The study therefore recommends that the competitiveness and stability of the exchange rate should be given due consideration as this will increase economic growth through increased investment. Keywords: Exchange rate, Economic growth, ADF, ECM, Nigeri

Effect of Credit Constraint on Profit of Small Scale Rice-Based Farmers in Niger State, Northwestern Nigeria

Credit constraint occurs when a farmer cannot increase expenditure on inputs in order to maximize profit due to lack of farm credit or high cost of credit. Farming households are confronted with credit constraint that results in low crop output and profit. Using a non-parametric measure of efficiency, the Data Envelopment Analysis Programme (DEAP) and a credit-constrained profit function, this study analyses the presence and effect of credit constraint on the profit maximization objective of rice farmers in a 2009 survey conducted in Niger State, Northwestern Nigeria. The differences between profit functions with and without a credit constraint gave a measure of the effect of credit constraint on profit. Results showed that most rice farmers (67.5%) were credit constrained. Credit-unconstrained rice farmers (CUF) that used formal credit spent N23,583.87±8662.18/ha and N11,806.45±6927.71/ha respectively on fertilizer and herbicides as compared to N16,675.00±9627.48/ha and N7,591.18±7503.02/ha respectively by informal credit recipients. On the other hand, credit constrained farmers (CCF) spent N11,949.78±8488.26/ha and N5550.00±5145.61/ha on fertilizer and herbicides. There was significant difference in gross margin of CUF (N315, 380.60/ ha) and CCF (N220, 477.85/ha). CCF were less efficient and less profitable. CUF, contrariwise, were able to spend more on improved farm inputs, more efficient and more profitable. It is recommended that suitable credit support and educational programmes for rice farmers should be established to encourage expenditure and efficient use of improved inputs, enhance rice production and increase profitability

The economic analysis of beef marketing in Akure, Ondo State

This study examined the economic efficiency of beef marketing in Akure, Ondo State. In this regard, the different marketing function performed by the beef sellers were identified and evaluated. Also the size and different components of beef marketing costs and margins were determined. A total sample of 110 respondents were randomly selected from three markets in the study area. Descriptive statistics and some other mathematical computations were also carried out.The evaluation of the beef sellers marketing efficiency showed that they are highly efficient with average efficiency ratio of 0.85. Analysis of the size and different components of marketing costs and margins revealed that purchase cost and transportation cost constituted the highest share of the total marketing cost. The gross and profit margin analysis also showed that beef sellers had high margins. When the gross and profit margins were expressed as a percentage of total revenue, the average was found to be 22.62 and 14.41 per cent respectively. (Af. J. of Livestock Extension: 2003 2: 61-66