THE ROLE OF MICRO FINANCE BANKS IN FINANCING AGRICULTURE IN NIGERIA (A CASE STUDY OF MICRO FINANCE BANKS OYIGBO RIVERS STATE)

ABSTRACT

Nigeria is endowed with mineral, oil gas fertile land for agriculture products production and finally human resources which contributed to make it a potentially a rich country.The study among other things was set to investigate the role of micro finance banks in production of goods and services and its resultants to the economy.Over the years the government has tried to out in place various programmes such as operation feed the nation, poverty eradication programmes and recently seven point agenda with empower low income earner and improve livelihood of rural people who are mostly farmers. This cannot be attained unless the poor are aided with micro credit and with the help of micro finance banks agriculture products will be enough for our country

CHAPTER ONE: INTRODUCTION

1.0 INTRODUCTION
There is no doubt among observers that Nigeria is a country rich in human and mineral resources. Having about 144 million populations of people occupying a land area of more than 975 thousands square kilometer which is less frequently use in agriculture.
Most of the lands are rich in cultivating arable crops such as corn, wheat, cocoa etc but they lie uncultivated because of inadequate funds from the microfinance banks around the area thereby contributing to poor agriculture products to our economic development at the present compared to the past years.

1.1 BACKGROUND OF THE STUDY
Prior to the advent of the oil boom in 19723 and 1974 agriculture was the major revenue generation to the country economy but it suffers server neglect thereby causing migration of people from rural areas to urban areas, thereby making the oil sectors of the economy to emerge as the nation s main foreign exchange and 85 percent of the total revenue to the government. These development results become a net importer of good item and raw material as a result of domestic supply.
Since it has become the truth to all Nigerians that a well programmed policy on agriculture sector will help both the military and civilians to take nice steps towards making changes to its formers self, the government under military and civilians regimes launched various programmes to accelerate foods Production in the country. In 1973, the nation Accelerated Food Production Project (NAFPP) was commended in twelve states in order to increase food production. Other programmes that came into being in the 70s and 80s include Operation Feed the Nations (OFN) and Seed Multiplication Distribution project.
Pour foreign exchange earning is a successful attempt to bring agriculture to our economy and reduce the risk of depending only on crude oil which still account or about 90 percent of food and the resultant effects was a huge dust that feed the nations.
According to micro finance policy, regulatory and supervision frameworks, for Nigeria (2005:1) micro financing is all about financial services to the poor who are traditionally not served by the conventional financial institutions.
The features distinguished micro finance banks from other fund financial product and these features are:

• The smallness of loan or saving collected
• The essence of assets based collateral and
• Simplicity of operation

In response of this by the government the central banks of Nigeria (CBN) embarked upon agricultural guarantee credit scheme and encourage microfinance banks to lent to agriculture by prescribing in its credit’s guidelines, the minimum proportion and advances that should be made agriculture.
Furthermore, in spite of these by the central banks of Nigeria (CBN) agriculture production still falls below the requirement in the country. However, it is the role of micro finance banks to finance agriculture in their locality thereby increasing food products in our economic and motivating young generation in the areas of farming.
Finally, microfinance banks ensure that their system and use if information technology (IT) is closely aligned to their business strategy both short term and long term also the management information system provides the microfinance banks with the reliability and flexibility that accommodate future changes.

1.2 STATEMENT OF THE PROBLEM
Since the disco very of oil in Nigeria, agricultural development and financing in Nigeria have suffered some neglect. Various effort by both the military and civilians regimes to set it back too its pre-oil periods have not met with adequate result.
The problems of agriculture were compounded as a result of farmers’ lack of adequate and easy access to credit facilities to help in the sectors of the economy.
This aspect is a major sources of concerned to the research work who which to consider the following questions why have sanctions and disbursement of loans been relatively low compared of needs of farmers, could it be as a result of farmers lukewarm attitude toward the repayment of loan granted to them, could be as a result of adequate finance by micro finance banks within the areas? Could it be as attributed to farmers’ lack of understanding of the banks and scope of the operations?

1.3 OBJECTIVES OF THE STUDY
The aim of this research is to review and revaluate the performance of microfinance banks with particular reference to its role and functions as they reflect to the agricultural extent, these functions and purpose for which the banks was established have failed so far in the agricultural sector.
The question of finance and technical advice to agriculture has been a major problem in the economy.

• To examine problems area such as bottleneck on the parts of the banks the agricultural sector in achieving the desired goals.
• How far has the banks been responding to the aspiration of the agriculture in terms of growth expansion?
• To evaluate the attitude of farmers toward agricultural credit repayment
• To examine such areas as operational policies and orientation and time agriculture project required before assistance and other areas involving managerial assistance to agriculture.
• To evaluate the performance of microfinance banks and make contributions to the knowledge as regards to operation.

1.4 RESEARCH QUESTIONS

• How far has the banks being responding to the aspiration of the agriculture in terms of growth expansion?
• Has the banks been able to solve their problems in order to improve in agricultural development?
• Do farmers pay back the loans granted to them as expected?
• Does the bank normally give the farmers orientation at the time of granting agricultural loans and other assistance as when required?
• Does the microfinance bank perform this work well?
• When the Afam Microfinance bank established in Oyigbo?

1.5 SCOPE OF THE STUDY
In this study, the researcher limits her research to financing the role of microfinance banks agriculture in Nigeria using Afam microfinance bank Oyigbo as her case study.
In the organization AMFB, she used the staffs (both senior and junior) of that organization to collect her information, most especially the managing director.
Also the researcher encountered several difficulties that restrained the collection of her data. As result the reader should not think that the researcher conducted the on a smooth sailing platform thus, the whole information she needed was given to her.
However, all efforts were made to make sure that unbiased data wee collected.

1.6 SIGNIFICANCE OF THE STUDY
There were several reasons why this study is conducted and is considered important in the microfinance banks institution, the finding of this study will not only benefit the researcher but also should be useful to others, that is farmers, businessmen and women and state institutions.
Furthermore, the farmers get the information on how to collect and repay the loan collected by them.
Also this study, the role of microfinance banks is financing agriculture in nigeria is important because it aids the economy to know how important agriculture is in our economy
Moreso, microfinance banks helps in providing the necessary facilities needed by agricultural societies and cooperatives societies.
In conclusion, this study is informative for individuals, state institution and cooperatives societies and anyone who wish to join agricultural sectors.

1.7 LIMITATION OF THE STUDY
This study is limited to farmers and other individuals who have the interest to join agriculture sector. This will benefit the farmers and some members who are still intending to enter agriculture production.
In carrying out research study like this, one is likely to face some problems such as

• Lack of sufficient capital to enables the researcher to prepare and distributed enough questionnaire to various agricultural production
• Great resources in form of money, energy and time where spent in getting some of the material for the study.
• The accessibility of official document that are required for this research were limited due to some restriction existing in the organization.

1.8 DEFINITION OF TERMS
MICROFINANCE BANKS: Is the provision of breed range of financial services to low income micro enterprises and household. These ranges include savings, loan, insurance leasing and money transfer.
AGRICULTURE: According to Ram lingam (1993:63) is the growing of plant and rearing of animal to providing our needs, the important of which is food.
DISBURSEMENT: Hornby (6th edition) is the transfer to the actual amount been disburse to farmers as loans.
CREDIT/LOAN: Hornby (6th edition) is the obligation by a farmer to the banks of its debt.