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CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
Agriculture remains the backbone of Nigeria’s economy, contributing approximately 25% to the Gross Domestic Product (GDP) and employing about 70% of the active labour force, with the majority being smallholder farmers (Food and Agriculture Organization [FAO], 2020). The sector is critical for food security, poverty reduction, and economic development, particularly in rural areas where agricultural activities constitute the primary source of livelihood for most households. However, the agricultural sector in Nigeria faces numerous challenges, including limited access to credit, inadequate extension services, climate variability, and poor infrastructure, which collectively constrain agricultural productivity and income generation (Adebayo and Ogunleye, 2021).
Microcredit has emerged as a crucial tool for addressing the credit constraints facing smallholder farmers in developing countries, providing access to financial services for resource-poor households who are typically excluded from formal banking systems (Yunus, 2018). Microcredit refers to the provision of small loans to low-income individuals and households to enable them to engage in productive activities, smooth consumption, and manage risks. In the agricultural sector, microcredit is particularly important for enabling farmers to purchase inputs, adopt improved technologies, and expand production (FAO, 2019).
Cassava (Manihot esculenta Crantz) is one of the most important staple food crops in Nigeria, serving as a major source of carbohydrates for over 80% of the population and a significant source of income for millions of smallholder farmers (International Institute of Tropical Agriculture [IITA], 2020). Nigeria is the largest producer of cassava in the world, accounting for about 20% of global production, with an estimated annual production of over 60 million tonnes. The crop is cultivated across all agro-ecological zones in the country, with Edo State being a significant production area (Bamire and Adebayo, 2019).
Edo State, located in the South-South geopolitical zone of Nigeria, is the largest producer of cassava in the South-South region of the nation (Iruonagbe et al., 2018). The state has favourable climatic conditions for cassava production, with adequate rainfall, suitable temperatures, and fertile soils. Cassava is a major livelihood activity for farming households in Edo State, providing food and income for rural communities. However, despite its production potential, cassava productivity in the state remains below potential, largely due to limited adoption of improved practices and inadequate access to credit (Igbinidu and Obayuwana, 2026).
The adoption of improved cassava production practices, including improved varieties, appropriate planting density, optimum fertilizer application, and integrated pest and disease management, is critical for enhancing cassava productivity and profitability (IITA, 2020). However, the adoption of these practices requires investment in inputs, which many smallholder farmers cannot afford due to limited financial resources. Microcredit provides a means for farmers to overcome these financial constraints and invest in improved production practices (Ekunwe et al., 2015).
Studies have demonstrated that access to microcredit has a positive effect on agricultural productivity and profitability. In Edo State, research conducted in Orhionmwon Local Government Area showed that credit beneficiaries had higher profit margins for cassava production (N377,194.99/ha) compared to non-beneficiaries (N223,000.74/ha) (Ekunwe et al., 2015). This finding underscores the potential of microcredit to enhance cassava production and improve the welfare of farming households in Edo State.
The concept of microcredit is rooted in the broader framework of microfinance, which encompasses a range of financial services including credit, savings, insurance, and payment services provided to low-income individuals and households (Armendáriz and Morduch, 2018). Microfinance institutions (MFIs) play a critical role in providing financial services to the poor, particularly in rural areas where formal financial institutions are absent or inaccessible. In Nigeria, various MFIs, including LAPO Microfinance Bank, NIRSAL Microfinance Bank, and the Bank of Industry (BOI), have been active in providing credit to agricultural households and small businesses (Biala and Galadima, 2025).
The microcredit landscape in Edo State has evolved significantly in recent years, with the Edo State Government expressing commitment to fostering a supportive environment for the operations of Micro Finance Cooperatives (Tribune Online, 2025). The Ministry of Business, Trade and Cooperatives has engaged with micro-finance cooperatives to understand their challenges and provide solutions, including improving funding accessibility and enhancing cooperative policies (Tribune Online, 2025). These efforts aim to strengthen the microfinance sector and enhance its contribution to agricultural development and rural livelihoods.
The determinants of farmers’ access to microcredit have been investigated in various studies, with factors such as ownership of smartphones, awareness of financial products, education, income, primary occupation, cooperative society membership, and extension contacts identified as positive influences (Mukaila, 2024). Conversely, factors such as age of farmers and household size have been found to negatively influence access to microcredit. Understanding these factors is essential for designing interventions to improve farmers’ access to credit.
The impact of microcredit on agricultural productivity and profitability has been documented across various agricultural sub-sectors. Research in Nigeria has shown that microcredit positively and significantly impacts farm yield and income (Mukaila, 2024). Similarly, studies on poultry farmers have demonstrated that access to microcredit leads to significantly higher profit efficiency (Ogunleye et al., 2025). These findings suggest that microcredit has the potential to enhance agricultural performance across different commodities and production systems.
Despite the potential benefits of microcredit for cassava production, significant challenges constrain farmers’ access to credit. Studies have identified untimely delivery of loans as the greatest constraint to loan acquisition among credit beneficiaries, while high interest rate charges and distance to financial institutions are major reasons for non-access among non-beneficiaries (Ekunwe et al., 2015). Additionally, fear of inability to repay, lack of contacts with banks, collateral requirements, and limited awareness of bank lending have been identified as constraints to credit access (Iruonagbe et al., 2018).
The relationship between microcredit and cassava production in Edo State requires comprehensive empirical investigation. While some studies have examined the effect of microcredit on crop production in specific Local Government Areas of the state (Ekunwe et al., 2015), a comprehensive analysis covering multiple areas and focusing specifically on cassava is needed. Understanding the mechanisms through which microcredit affects cassava production, including its impact on input use, technology adoption, and profitability, is essential for informing policy and program design.
The role of microcredit in promoting sustainable agricultural development and poverty reduction has been recognized in national policy frameworks (Federal Ministry of Agriculture and Rural Development [FMARD], 2016). However, significant gaps remain between policy intentions and implementation realities, particularly regarding the delivery of credit services to smallholder farmers. Understanding the effects of microcredit on cassava production in Edo State is essential for identifying the strengths and weaknesses of existing credit programs and informing improvements.
The gender dimensions of microcredit access and its effects on cassava production have implications for intervention design (Doss et al., 2020). Women play significant roles in cassava production in Edo State, but often face constraints in accessing credit due to limited collateral, gender-based discrimination, and limited financial literacy. Research in Edo State has shown that while female farmers constitute a majority of the population, their access to bank credit for farming remains abysmally low (Iruonagbe et al., 2018).
The broader policy environment for microcredit in Edo State has been evolving, with government initiatives aimed at empowering MSMEs and improving access to credit through partnerships with financial institutions such as BOI, NIRSAL, and LAPO (Vanguard, 2024). However, the effectiveness of these initiatives in reaching cassava farmers and their impact on cassava production requires empirical assessment.
In light of the foregoing, this study is designed to examine the effects of microcredit on cassava production in Edo State, Nigeria. The study will describe the socioeconomic characteristics of cassava farmers, examine the accessibility of microcredit, identify the factors influencing access to microcredit, assess the effect of microcredit on cassava productivity, and identify the constraints to accessing microcredit. The findings will contribute to the empirical literature on microcredit and agricultural development in Nigeria and provide evidence for policy formulation and program design.
1.2 Statement of the Problem
Cassava production in Edo State has significant potential to contribute to food security, income generation, and poverty reduction among farming households. However, cassava productivity in the state remains considerably below potential, largely due to limited adoption of improved production practices and inadequate access to credit for input purchase and technology adoption (Igbinidu and Obayuwana, 2026). This low productivity constrains the contribution of cassava to improving livelihoods and reducing poverty among farming households, despite the favourable agro-ecological conditions in the state.
Microcredit has the potential to address the financial constraints facing cassava farmers by enabling them to purchase improved inputs, adopt recommended practices, and expand production (Ekunwe et al., 2015). However, access to microcredit among cassava farmers in Edo State remains limited, with many farmers unable to access formal credit due to various constraints. The limited access to microcredit constrains farmers’ ability to invest in improved cassava production, perpetuating low productivity and poverty (Iruonagbe et al., 2018).
The extent of access to microcredit among cassava farmers in Edo State has not been adequately documented. While some studies have examined credit access in specific Local Government Areas (Ekunwe et al., 2015), comprehensive data on access to microcredit among cassava farmers across the state is limited. Understanding the current status of credit access is essential for identifying gaps and designing interventions to improve access.
The factors that influence cassava farmers’ access to microcredit in Edo State have not been comprehensively studied. Various factors, including socioeconomic characteristics, institutional support, and awareness of financial products, likely influence access to credit (Mukaila, 2024). However, the specific factors affecting credit access among cassava farmers in Edo State require empirical investigation to inform targeting and intervention design.
The effects of microcredit on cassava productivity and profitability in Edo State have not been adequately quantified. While evidence from other crops and regions suggests positive effects (Ekunwe et al., 2015; Ogunleye et al., 2025), the specific magnitude of the effect of microcredit on cassava production in Edo State requires investigation. Without empirical evidence, the case for promoting microcredit as a tool for enhancing cassava production remains incomplete.
The mechanisms through which microcredit affects cassava production, including its impact on input use, technology adoption, and farming practices, have not been adequately explored. Understanding these mechanisms is essential for designing credit programs that effectively support cassava production and maximize the impact of credit on productivity and profitability.
The constraints that limit cassava farmers’ access to microcredit in Edo State require systematic identification and analysis. Barriers such as high interest rates, collateral requirements, untimely loan delivery, limited awareness, and distance to financial institutions likely constrain access (Ekunwe et al., 2015; Iruonagbe et al., 2018). However, the relative importance of these constraints in the Edo State context requires investigation to inform intervention design.
The contribution of microcredit to sustainable cassava production and rural livelihoods requires assessment. Beyond immediate productivity effects, microcredit may contribute to poverty reduction, food security, and rural development (Biala and Galadima, 2025). Understanding these broader effects is essential for situating microcredit within the context of sustainable agricultural development.
The sustainability of microcredit programs for cassava farmers in Edo State requires investigation. Issues such as loan repayment rates, credit program sustainability, and the long-term viability of credit-financed improvements need to be assessed to ensure that credit programs achieve their intended outcomes without creating unsustainable debt burdens.
The gender dimensions of microcredit access and its effects on cassava production require exploration (Doss et al., 2020). Women play significant roles in cassava production in Edo State, but often face greater constraints in accessing credit (Iruonagbe et al., 2018). Understanding gender disparities in credit access and impact is essential for designing inclusive credit programs that benefit both male and female farmers.
The institutional and policy environment affecting microcredit access for cassava farmers in Edo State requires analysis. Government policies, institutional frameworks, and support programs influence farmers’ access to credit (Biala and Galadima, 2025). However, the effectiveness of existing institutional mechanisms in supporting cassava farmers’ access to credit requires assessment.
Given the foregoing, this study is designed to examine the effects of microcredit on cassava production in Edo State, Nigeria. The study will specifically: (i) describe the socioeconomic characteristics of cassava farmers; (ii) examine the accessibility of microcredit by cassava farmers; (iii) identify the factors influencing access to microcredit; (iv) assess the effect of microcredit on cassava productivity; and (v) identify the constraints to accessing microcredit.
1.3 Aim of the Study
The aim of this study is to examine the effects of microcredit on cassava production in Edo State, Nigeria.
1.4 Objectives of the Study
The specific objectives of this study are to:
- Describe the socioeconomic characteristics of cassava farmers in Edo State.
- Examine the accessibility of microcredit by cassava farmers in Edo State.
- Identify the factors influencing cassava farmers’ access to microcredit in Edo State.
- Assess the effect of microcredit on cassava productivity in Edo State.
- Identify the constraints to accessing microcredit by cassava farmers in Edo State.
To achieve the objectives of this study, the following research questions are posed:
- What are the socioeconomic characteristics of cassava farmers in Edo State?
- What is the level of accessibility of microcredit by cassava farmers in Edo State?
- What factors influence cassava farmers’ access to microcredit in Edo State?
- What is the effect of microcredit on cassava productivity in Edo State?
- What are the constraints to accessing microcredit by cassava farmers in Edo State?
The following null and alternative hypotheses are formulated for this study:
Hypothesis One
- H₀: There is no significant relationship between socioeconomic characteristics and cassava farmers’ access to microcredit in Edo State.
- H₁: There is a significant relationship between socioeconomic characteristics and cassava farmers’ access to microcredit in Edo State.
- H₀: There is no significant difference in productivity between cassava farmers with access to microcredit and those without access to microcredit in Edo State.
- H₁: There is a significant difference in productivity between cassava farmers with access to microcredit and those without access to microcredit in Edo State.
- H₀: There is no significant relationship between microcredit and the adoption of improved cassava production practices in Edo State.
- H₁: There is a significant relationship between microcredit and the adoption of improved cassava production practices in Edo State.
- H₀: Institutional factors (extension contact, cooperative membership, distance to financial institutions) do not significantly influence cassava farmers’ access to microcredit in Edo State.
- H₁: Institutional factors (extension contact, cooperative membership, distance to financial institutions) significantly influence cassava farmers’ access to microcredit in Edo State.
- H₀: Cassava farmers in Edo State do not face significant constraints to accessing microcredit.
- H₁: Cassava farmers in Edo State face significant constraints to accessing microcredit.
1.7 Significance of the Study
This study is significant for several reasons. First, it will contribute to the empirical literature on microcredit and agricultural development in Nigeria, specifically focusing on cassava production in Edo State, where limited comprehensive research has been conducted on this subject. The findings will add to the growing body of knowledge on the role of microcredit in enhancing agricultural productivity and rural livelihoods.
Second, the study will provide policy-relevant information to guide decision-making regarding microcredit programs, agricultural extension services, and support for cassava farmers. By identifying the factors influencing credit access and the effects of credit on productivity, the findings will inform the design of effective policies and programs to promote microcredit access and enhance cassava production.
Third, the findings will assist microfinance institutions and development organizations in designing and delivering more effective credit products and services for cassava farmers. Understanding farmers’ credit needs, access constraints, and the effects of credit on production will enable financial institutions to tailor their products and services to better serve cassava farmers.
Fourth, the study will provide evidence on the effects of microcredit on cassava productivity, demonstrating the benefits of credit access and building a case for investment in microcredit programs for agricultural development. This evidence can be used to motivate policy attention and support advocacy for increased investment in agricultural microfinance.
Fifth, the research will identify the specific constraints to credit access in the study area, informing the design of interventions to address these barriers and facilitate improved credit access. This will contribute to more effective and sustainable outcomes from microcredit programs.
Sixth, the study will be useful for agricultural extension services in understanding the credit constraints faced by cassava farmers and the role of credit in promoting technology adoption. This information can guide extension advisory content and approaches.
Seventh, the findings will contribute to the broader discourse on financial inclusion and agricultural development in Nigeria, providing a case study from Edo State that can be compared with findings from other regions. This will enhance understanding of regional variations and commonalities in microcredit access and impacts.
Eighth, the study will highlight the gender dimensions of microcredit access, providing evidence on differential patterns and constraints faced by male and female cassava farmers. This information is essential for designing gender-sensitive credit programs.
Ninth, the research will provide baseline data on microcredit access and productivity that can be used for monitoring and evaluation of credit programs and interventions in the study area. This will facilitate evidence-based assessment of program impacts and outcomes.
Tenth, the study will contribute to capacity building by providing research experience and training opportunities for researchers, students, and field enumerators involved in the project. This will strengthen local research capacity and promote knowledge transfer in agricultural finance research.
1.8 Scope of the Study
The study focuses on the effects of microcredit on cassava production in Edo State, Nigeria. The geographical scope covers selected Local Government Areas in Edo State, representing different agricultural zones and cassava production systems within the state. The selection of Local Government Areas will be based on agricultural importance, cassava production potential, diversity of livelihood patterns, accessibility, and representation of different agro-ecological zones.
The content scope encompasses microcredit, defined as small loans provided to low-income individuals and households for productive activities. The study examines access to microcredit from formal financial institutions, including microfinance banks, cooperative societies, and government credit programs. The study focuses specifically on cassava production, including input use, technology adoption, productivity, and profitability.
The study population consists of cassava farmers in the selected Local Government Areas, with the head of household or the primary decision-maker serving as the respondent. The study focuses on smallholder farmers who constitute the majority of cassava producers in the state.
The analytical scope covers descriptive statistics to characterize the sample population and credit access patterns, logistic regression to identify factors influencing credit access, t-tests to compare productivity between credit beneficiaries and non-beneficiaries, and descriptive analysis to identify constraints to credit access.
The study is limited to the 2023/2024 production season for primary data collection, though secondary data sources may provide additional context. The study does not cover all Local Government Areas of Edo State beyond the selected ones.
1.9 Limitation of the Study
The study is subject to several limitations. First, the geographical scope is limited to selected Local Government Areas of Edo State. While these are selected to represent different agricultural zones, the findings may not be directly generalizable to other Local Government Areas in Edo State or other states of Nigeria, given variations in agro-ecological conditions, socioeconomic contexts, and institutional environments.
Second, the study relies on primary data collected through structured questionnaires from a sample of cassava farmers. The accuracy and reliability of the data depend on the honesty and recollection ability of respondents, which may introduce recall bias and measurement errors. Respondents may overstate or understate their credit access, productivity levels, and other variables.
Third, the cross-sectional nature of the study, covering a single production season, may not capture temporal variations in credit access and productivity outcomes. Credit access and its effects may vary over time, and a longitudinal study would provide a more comprehensive understanding of these dynamics.
Fourth, the study relies on self-reported credit access and productivity data, which may be subject to measurement errors. Verification of credit records and production data could have provided more objective measures but were beyond the scope of this study.
Fifth, the study is constrained by time and financial resources, which limited the sample size and the scope of data collection. A larger sample and more extensive data collection, including qualitative methods such as focus group discussions and key informant interviews, would have strengthened the study findings.
Sixth, the study did not account for the potential endogeneity of credit access decisions, which could bias the estimated relationships between credit access and productivity. While statistical techniques such as logistic regression can help control for some confounders, unobserved factors may still influence both credit access and productivity outcomes.
Seventh, the study did not explore the economic profitability of credit-financed cassava production beyond productivity measures. Understanding the cost-benefit implications of credit access would provide a more comprehensive assessment.
Eighth, the study did not examine the quality aspects of cassava production, including root quality and processing characteristics. Quality attributes affect market prices and profitability but were beyond the scope of this study.
Ninth, the study did not assess the sustainability of credit-financed production improvements, including the long-term viability of credit-financed investments and their implications for household welfare beyond the immediate production season.
Tenth, the study is based on data collected in a specific time period, and subsequent developments in credit availability, market conditions, and policy frameworks may have altered the credit access landscape and outcomes.
Despite these limitations, the study provides valuable insights into the effects of microcredit on cassava production in Edo State, contributing to the evidence base for agricultural credit policy and program design.
1.10 Definition of Terms
Microcredit: This refers to small loans provided to low-income individuals and households to enable them to engage in productive activities, smooth consumption, and manage risks. In this study, microcredit refers to loans obtained from formal financial institutions, including microfinance banks, cooperative societies, and government credit programs.
Cassava: This refers to the root crop (Manihot esculenta Crantz) grown for its edible tuberous roots, which are a major source of carbohydrates for the Nigerian population. Cassava is used for food, feed, and industrial purposes.
Cassava Production: This refers to the cultivation of cassava, including all activities from land preparation to harvesting and processing. In this study, cassava production is measured in terms of yield per hectare.
Microfinance Institution (MFI): This refers to an organization that provides financial services to low-income individuals and households, including credit, savings, insurance, and payment services. In Nigeria, MFIs include microfinance banks, cooperative societies, and non-governmental organizations.
Credit Access: This refers to the ability of a farmer to obtain credit from a financial institution. In this study, a farmer is considered to have access to microcredit if he or she has obtained a loan from a formal financial institution for cassava production.
Credit Beneficiary: This refers to a farmer who has obtained microcredit for cassava production. In this study, credit beneficiaries are compared with non-beneficiaries to assess the effects of microcredit.
Non-Beneficiary: This refers to a farmer who has not obtained microcredit for cassava production. Non-beneficiaries serve as a comparison group to assess the effects of microcredit.
Productivity: This refers to the efficiency of production, measured as the ratio of output (cassava yield) to inputs (land, labour, capital, and other resources). In this study, productivity is measured in terms of cassava root yield per hectare.
Socioeconomic Characteristics: These are the personal, social, and economic attributes of farmers that may influence their behaviour and decisions, including age, gender, education level, farming experience, household size, income, land ownership, and membership in organizations.
Improved Cassava Production Practices: These are the technologies and management practices developed and recommended by agricultural research institutions and extension services for optimizing cassava production, including improved varieties, planting density, fertilizer application, and pest and disease management.
Edo State: A state in the South-South geopolitical zone of Nigeria, known for its agricultural production, particularly cassava, which is the most cultivated arable crop in the state.
Smallholder Farmer: A farmer who cultivates a small plot of land, typically less than 5 hectares, using family labour and relying on agriculture as the primary source of livelihood.
Constraints to Credit Access: These are the barriers and obstacles that limit farmers’ ability to obtain microcredit, including high interest rates, collateral requirements, untimely loan delivery, limited awareness, distance to financial institutions, and fear of inability to repay.
Cooperative Society: A voluntary association of farmers who pool their resources for mutual benefit, often providing access to credit, inputs, and information. Membership in cooperative societies has been found to influence access to credit.
Extension Services: This refers to the system of providing information, advice, and training to farmers to help them improve their agricultural practices and adopt new technologies. Extension services can facilitate credit access by providing information about credit programs.
Collateral: An asset that a borrower pledges to a lender as security for a loan. Collateral requirements are often a constraint to credit access for smallholder farmers who lack formal assets.
Interest Rate: The cost of borrowing money, expressed as a percentage of the loan amount. High interest rates are a common constraint to credit access among smallholder farmers.
Loan Repayment: The process of paying back a loan, including principal and interest. Loan repayment terms affect farmers’ ability to access credit and their willingness to borrow.
Profitability: This refers to the financial return from cassava production, measured as the difference between revenue and costs. Microcredit is expected to enhance profitability by enabling farmers to invest in improved production practices.
Financial Inclusion: This refers to the access and usage of formal financial services by individuals and businesses. Microcredit contributes to financial inclusion by providing financial services to low-income populations.
Agricultural Finance: This refers to financial services provided to the agricultural sector, including credit for production, investment, and marketing. Agricultural finance is critical for agricultural development and transformation.
