Abstract

This work on the effect of microcredit on smallholder farm productivity in Osisioma Ngwa LGA of Abia State was designed to study the socio-economic characteristics of fanners, sources of micro finance; examine the Loan amount credited to beneficiaries, Productivity levels of the beneficiaries, the effects of microfinance on smallholder farm productivity, factors affecting farmers productivity and finally problem of securing credit from micro finance institutions in the State. Well-structured questionnaire was used to collect data. Data were analyzed using descriptive statistical tools like frequency, mean, percentage as well as inferential statistics like correlation matrix and multiple regression model. Result showed that majority of the farmers were within the age bracket of 40-59 years, male dominated farming in the area with 70% and female 30%, majority of the farmers had formal education, greater percentage of the farmers had above 1.0 I hectare of land under cultivation. The study also found out that the respondents obtained loan from both formal and informal source with credit from friends and relative as the most dominant source; furthermore the result showed that almost all the respondent demanded for credit range from WI 0,000 - W l 00,000. The result further showed that a mean productivity level of 1.99kg/N was achieved by the farmers. The result shows a positive and significant relationship between productivity and amount of credit. Linear functional form gave the best line of fit. R value was 88.6% and statistically significant at l %. Input cost, capital, loan, Fann size and age were significant variable influencing small holder's farmer's productivity. The major problem militating against access to credit among others was delayed approval. Establishment of Agricultural and micro finance bank in rural area, improvement in their services, increase the rate at which they lend loans to farmers, provision of input etc were recommended.