




































 

 

 
1 

© 2019 Conscientia Beam. All Rights Reserved. 

EFFECTS OF COMMUNITY FINANCING INSTITUTIONS ON CASSAVA FARMERS 
INCOME IN OYO STATE, NIGERIA   

 

 

Akinwalere B.O.1+ 
Uche G.C.2 

 

1,2Department of Agricultural Extension and Communication Technology, 
Federal University Technology Akure, Nigeria 

 
 

 
(+ Corresponding author) 

 ABSTRACT 
 
Article History 
Received: 19 October 2018 
Revised: 22 November 2018 
Accepted: 2 January 2019 
Published: 4 February 2019 
 
 

Keywords 
Farmers 
Cassava 
Financial 
Institution 
Credit. 

 
The study examined the effect of community financing institutions on cassava farmers’ 
income in Oyo State. The objectives were to examine the socio-economic characteristics 
of the respondents in the study area, identify governmental & non-governmental 
community financing institutions in the study area, and examine the effect of the 
financial institution programme on respondents’ income and to identify the factors 
affecting the accessibility of credit facilities among small holder farmers in Oyo State. A 
Multi-stage sampling technique was used for this study. In the first stage, a purposive 
sampling was used to select Lagelu, Akinyele and Ido Local Government Areas in 
Ibadan. Random sampling was used to select three communities from each of the three 
Local Government Areas and from each community, 10 respondents were selected 
randomly to give a total of 90 respondents of cassava farmers and processors. The 
analysis of the socio-economic characteristics revealed that majority of respondents that 
were involved in the cassava production and processing activities in the study area were 
males, the ages ranged between 17- about 65years and majority (38.9%) were between 
the ages 49-56years with the mean age of 49 years. Most (96.7%) were married with a 
high household size of between 6-10 numbers. The level of education of respondents 
revealed that majority (43.3%) had one form of education or the other which could 
enhance performance in production and processing activities. The primary occupation 
of respondents reveals that all of them were farmers, some are artisans and their 

monthly allowance ranged between less than ₦20,000.00 and ₦75,000.00 as most of 

them earn less than ₦30,000.00. Chi square showed that there is a significant 

association between rural financing institution and cassava farmers’ income (χ²=0.014, 
p=6). Also 57.8% of the respondents affirmed that the benefits received from the 
financial institution has a high effects on their standard of living which is affirmed by 
43.3% of the respondents who agreed that their monthly income has increased as a 
result of the accessibility to fund.  From the result, 53.3% of the respondents claimed 
that the high interest rate charged by the institution was the major challenge and 
47.8% of the respondents affirmed that the Interest rate should be affordable as this will 
enhance accessibility of credits.  
 

Contribution/Originality: This original study focused on the effects of community financing institution on 

cassava farmers’ income. It revealed the significant relationship between rural financing and cassava farmers’ 

income and also the major constraint of high interest rate facing the farmers in the study area.   

 

 

 

Current Research in Agricultural Sciences 
2019 Vol. 6, No. 1, pp. 1-8 
ISSN(e): 2312-6418 
ISSN(p): 2313-3716 
DOI: 10.18488/journal.68.2019.61.1.8 
© 2019 Conscientia Beam. All Rights Reserved. 

 
 
 

 
 

 
 
 
 
 

https://www.doi.org/10.18488/journal.68.2019.61.1.8


Current Research in Agricultural Sciences, 2019, 6(1): 1-8 

 

 
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© 2019 Conscientia Beam. All Rights Reserved. 

1. INTRODUCTION 

Agriculture is a major source of livelihood throughout the world, especially for the majority of poor people 

living in rural areas in developing countries. A key challenge for the majority of these farmers is access to finance. 

Lack of access to finance is a key impediment to farmers in improving the efficiency of their productions and 

adopting better technologies in the development of cassava production. Agricultural developments in Nigeria were 

established during the third National Development Plan (1975-1980) to enhance agriculture and food production. 

These are World Bank assisted projects consisting of an input delivery and credit supply system. 

Agricultural finance refers to financial services ranging from short, medium and long term loans, to leasing, to 

crop and livestock insurance, covering the entire agricultural production, input supply and distribution, 

wholesaling, processing and marketing. Rural and agricultural financial services are provided by formal and 

informal financial institutions as well as through financial arrangements within the agricultural value chain. 

However the role of financial institution in agricultural development involves ways and means by which a 

farmer obtains the entire necessary fund required in order to carry out agricultural production. And it also deals 

with the supply of demand for funds in agricultural sector of the economy. Where a farmer has a sufficient capital of 

his own to carry out farm production he can then obtain credit from the best available sources. 

Agricultural finance plays significant role in the development of the agricultural sector because adequate 

finance is required by farmers to establish economic size farms or large scale farms, and to expand existing farms. 

Adequate finance also brings significant changes in the structure of agriculture. This is because finance enables the 

acquisition of machinery and farm equipment to substitute labour use and the purchase of other farm inputs and the 

promotion of agricultural production processes. The use of finance in farming leads to rapid increase in farm land 

value which necessitates the farmers to look outward for fund. Agricultural finance from co-operative societies is 

very important in communities where credit institutions such as commercial banks are lacking; farmers who belong 

to a cooperative society can often get inputs against liens over produce for sale through the societies. Therefore, 

agricultural finance in development has been made mandatory in Nigeria through government directives on rural 

banking and the lending of a certain percentage of the banks loanable fund or deposit to agricultural sector of the 

economy [1]. 

While the majority of Africa's population lives in rural areas and depends on agricultural production, the supply 

of financial services to the sector is inadequate. Reasons for the lack of access to finance in rural areas and in the 

agricultural value chains are numerous. They can be found in the slow and uneven entry of formal financial 

institutions into rural areas, which leads to rural clients often remaining beyond the reach of financial outlets, to the 

reluctance of financial institutions to provide financial services to agricultural and rural activities, whose risk profile 

is frequently not fully understood and which are often informal in nature. 

Factors such as poor infrastructure and widely dispersed populations in rural areas raise transaction and 

information costs, thus further hindering the spread of financial services. In addition, title and property rights can 

be difficult to verify in rural areas, posing problems in the use of collateral. Subsidized lending programs for rural 

recipients have also contributed to obstructing the development of a sustainable rural banking sector in Africa. 

Farmers and agricultural companies typically face seasonal income and long maturation periods and are 

exposed to considerable risks. Seasonality requires specifically tailored financial services and conditions, such as 

longer repayment and grace periods, less frequent repayments, or leasing products. Agricultural risks to be 

considered include price fluctuations for inputs and products or crop failure due to pests and diseases, temperature 

or variable rainfall. Despite these difficulties, formal rural and agricultural finance has been making advances in the 

continent, and such this study seeks to answer questions as to the effects of financial institutions on cassava farmers 

income despite the various problems and uncertainties characterizing agricultural sector, such questions as;  

I. What are the socio economic characteristics of the cassava farmers? 



Current Research in Agricultural Sciences, 2019, 6(1): 1-8 

 

 
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© 2019 Conscientia Beam. All Rights Reserved. 

II. What are the types of governmental and non-governmental financing institutions present in the study 

area? 

III. What are the effects of community financial institutions on the farmer’s income? 

IV. What are the factors affecting the accessibility of credit among small holder farmers in the study area? 

 

Specifically, the objectives of the study are to; 

(a) ascertain the socio-economic characteristics of the respondents in the study area (b) identify governmental & 

non-governmental community financing institutions in the study area (c) examine the effect of the financial 

institution programme on respondents’ income (d) identify the factors affecting the accessibility of credit facilities 

among small holder farmers in the study area. 

The hypothesis of the study in null form is as follows; 

Ho: there is no significant relationship between the community financing institutions and the cassava farmers’ 

income. 

 

2. RESEARCH METHODOLOGY 

The study was carried out in Ibadan, Oyo state. It is situated within the tropics in the south western part of 

Nigeria. It is a metropolitan city with an extensive geographical area of 1,190sqm (metropolis) and 2,600sqm 

(urban). It is 120km east of the border with Republic of Benin, 128km inland north Lagos and 530km south-west of 

Abuja. Other cities nearby includes; Lalupon, Apomu, Ikire, Fiditi, Olupona. It is located between longitudes 

3˚54ˈ21ˈˈ and latitude 7˚22ˈ39ˈˈ and it is situated at elevation 181 meters (593ft) above sea level. It came into 

existence in 1829. The state has a population of 3,565,108, making it the biggest city in Oyo and the third most 

populous city in Nigeria, after Lagos and Kano. Oyo State has a tropical wet and dry climate which characterize the 

wet and dry season respectively. This wet season with relatively high humidity lasts from April to October while 

the dry season lasts from November to March. Its yearly average high and low temperature is about 31ᵒC and 22ᵒC 

respectively with substantial agriculture land mass and climate conducive for the production of diverse range an 

tree crops, fruits, vegetables, fishery, forestry and livestock product. 

The State is predominantly a Yoruba society with a large percentage of its labour force engaged in agriculture. 

Crops grown in Ibadan include cassava and maize produced annually, fruits like mangos, pineapple and citrus 

species and vegetables especially tomatoes and chilies. The state capital is a major transit point linking the coast to 

major cities in the north. It is abundant in clay, kaolin and aquamarine also serves as a trade center for cassava, 

cocoa, cotton, timber, rubber and palm oil. It has several industries for processing agriculture products like tobacco, 

cereals, leather and timbers. Agriculture is the dominant occupation of the people of Oyo State providing income 

and employment opportunities for over 70% of its population. It contributes well over 75% of the state’s Gross 

Domestic Product.  

Multi-stage sampling procedure was used as sampling technique for this study. 

Stage 1; a purposive sampling was used to select samples in Lagelu, Akinyele and Ido Local Government Areas 

within Ibadan metropolis. The choice of these Local Government Areas in the study area was as a result of the 

dominance of cassava farmers in the area for better representative of the sample. 

Stage 2; Random sampling was used to select three communities from each of the three Local Government 

Areas in the study area. From these communities 10 respondents were selected randomly to have a total of 90 

respondents of cassava value chain processors who were interviewed through well-structured questionnaire. 

Primary data were collected using a well-structured questionnaire that was administered to the cassava farmers 

who are into value chain production.  



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© 2019 Conscientia Beam. All Rights Reserved. 

The data were analyzed using descriptive and inferential statistical analysis. The descriptive analysis such as 

frequency distribution, percentages, standard deviation and mean were used to analyze the objectives. Inferential 

statistics involved the use of Karl Pearson Product Moment Correlation as explained below:   

Karl Pearson Product Moment Correlation  

This was used to determine the strength of relationship between variables when measured at a particular 

interval level. It can be interpreted as in the case of the spearman rho. Pearson product moment correlation does 

not take into consideration whether a variable has been classified as dependent or independent variable. It treats all 

variables equally. For decision making, we check the critical values of r on the table using degree of freedom (n-2). 

R-values indicate relationship but not causality. So there may be a relationship between the variables but it does not 

mean one is the cause of another. This is because we are dealing with a bi-variate relationship and there could be 

other variables/factors in the environment that are not captured by our research. 

ϒ  
         

√ *     (  )    +*     (  )    +
 

Where x is independent variable 

             Y is dependent variable 

 ϒ is the Karl Pearson correlation coefficient 

n is the number of variable 

 

3. RESULTS AND DISCUSSION  

3.1. Respondents’ Socio Economic Characteristics  

The characteristics of farmers interviewed in this study as contained in table 1 include sex, age, marital status, 

educational level, religion, farm size, level of total annual income, farming experience, household size, and primary 

occupation. According to sex, 60% of the farmers are males and 40% are females. This may be because production 

and processing activities are seen to be very rigorous than actual production and better suited to men. 

Based on marital status 96.7% of the farmers are married, compared to 2.2% that are single, 1.1% widowed. 

This implies that a larger proportion of the respondents are married which can lead to a well co-ordinated farm 

work activity. This also could contribute significantly to the labour force which will improve productivity and 

income. The married respondents will be in better position to enjoy social inclusion, occupational responsibilities, 

mutual and working interactions that would facilitate the production and processing of cassava in the study area. 

The mean age is 49 years, 1.1% are below 27 years, 5.6% are between 28 – 37 years, 31.1% are between 38- 47 years 

and 15.6% are between 58- 67 years. This implies that the majority of the farmers are in their active age. From the 

survey, 51.1% of the respondents were Muslims, 42.2% of the respondents were Christian, while 6% were 

traditionalists. This implies that majority of the respondents are Islam. This is likely to be true, as Oyo State is 

predominated by people who are of the Islamic faith. The educational level of famers varies with about 32.2% 

having completed primary school education, while 43.3% have completed secondary education, 13.3 % completed 

tertiary education, 7.8% had non-formal education, while 3.3% had no formal education. This implies that majority 

of the respondents have basic secondary education. From the survey, 97.8% of the respondents are involved in 

farming as their primary occupation while 2.2% were artisans. This indicates that majority of the respondents are 

primarily farmers. From the survey, 52.2% of the respondents have a household size of 6-10, 34.4 % has a household 

size of 1-5, while 13.3% have a household size which is above 10. The mean score for the household size is 6. This 

implies that majority of the respondents have a household size of 6-10 which is an advantage in cassava production 

and processing through family labor. Also. 37% of the respondents have a farming experience of between 17-

24years of farming experience, 30% are between 9-16years, and 17.8% are between 25-32years, 7.8% fall below 

8years, while 6.7% are between 33-40years. The mean value of year of experience of the farmers is 19years. This 

implies that majority of the respondents are experienced farmers.  



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© 2019 Conscientia Beam. All Rights Reserved. 

Table-1. Distribution of Socio-economic Characteristics of Respondents 

 Age(years) Frequency Percent (%) Mean 

 < 27 1 1.1 
 

28-37 5 5.6 
 

38-47 28 31.1 
 

48-57 42 46.7 
 

58-67     14 15.6 
 

Total 90 100 49 

Gender 
Male 54 60 

 Female 36 40 
 Total 90 100 
 Marital status  

Widowed 1 1.1 
 Married 87 96.7 
 Single 2 2.2 
 Total 90 100 
  Religion  

Christian 38 42.2 
 Islam 46 51.1 
 Traditional 6 6.7 
 Total 90 100 
  Level of education 

Primary education 29 32.2 
 Secondary education 39 43.3 
 Tertiary education 12 13.3 
 Non formal education 7 7.8 
 No formal education 3 3.3 
 Total 90 100 
 Primary occupation 

Farming 88 97.8 
 Artisan 2 2.2 
 Total 90 100 
  Household size 

1-5 31 34.4 
 

6-10 47 52.2 
 

Above 10 12 13.3 
 

Total 90 100 6 

Farming Experience( years) 
1-8 7 7.8 

 
9-16 27 30 

 
17-24 34 37.8 

 
25-32 16 17.8 

 
33-40 6 6.7 

 
Total 90 100 19 

Annual income(₦) 

< 200000 13 14.4  

200001-400000 33 36.7  

400001-600000 16 17.7  

600001-800000 20 22.2  

800001-1000000 7 7.8  

> 1000000 1 1.1  

Total 90 100 491685.40 

 

 

 

 



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© 2019 Conscientia Beam. All Rights Reserved. 

Farm size 
Less than 2 hectares 83  92.2 
2-5hectares   7  7.8 
Above 5 hectares   0  0.0 

Total  90  100 
Source: Field survey, 2017 

 

The result on table 1 is a clear indication that majority of the cassava farmers have been in farming for very 

long time, hence they would be vast in the knowledge of farming practices. With regards to annual income, 36% of 

the respondents earn between ₦200,001-₦400,000, 22.2% earn between ₦600,001-₦800,000, 18.9% earn between 

₦400,001-₦600,000, 14.4% earn less than ₦200,000, 7.8% earn between ₦800,001-₦100,000, while 1.1% earn 

above ₦100,000.  The mean income is ₦491,685.40. This implies that majority of the respondents have a low total 

annual income. It was also revealed that 92.2% of the respondents have less than a hectare of land, 7.8% has 

between 2-5hectares of land. This implies that majority of the farmers are small farm holders.   

 

3.2. Governmental and Non-Governmental Community Financing Institutions 

From the survey, 61.1% of the respondents claimed that the financial institutions in the community are not 

owned by the government while 38.9% claimed the financial institution are owned by the government. This implies 

that most of the financial institutions are not governmentally owned. Also 46.7% of the respondents claimed that 

some of the institutions available in the communities are savings and loan societies, 25.6% claimed that some of the 

institutions are micro finance banks, 11.1% claimed that some are credits union, 8.9%t claimed that some other 

financial institutions are owned by other financial institution present in the community, 7.8% claimed some are 

commercial banks while 4.4% claimed that some are agricultural banks (table 2). This implies that majority of the 

financial institutions present are owned by the savings and loan society (cooperative societies), and the respondents 

are members and also benefit from. 

 
Table-2. Distribution of the presence of financial institution and owners 

Government Owned Frequency Percent (%) Rank  

Yes 35 38.9  
No 55 61.1  
Total 90 100  

Name of institution 
  

  
Savings & loan society 42 46.7 1st 
Micro finance banks 23 25.6 2nd  
Credit union 10 11.1 3rd  
Commercial banks 7 7.8 4th  

Others  4 4.4 5th  
Agricultural bank 4 4.4 6th  
 Total 90 100  

               Source: Field survey, 2017 

 

3.3. Effects of Financial Institution on Respondent’s Income 

From table 3, increase in the standard of living of the respondents was greatly affected by the financial 

institution and thus was ranked 1st with 4.39 point. 57.8% of the respondents claimed the benefits received from the 

financial institution has a high effects on their standard of living which is affirmed by 43.3% of the respondents who 

agreed that their monthly income has increased as a result of the accessibility to fund, 22.2% affirmed that it has a 

moderate effect on their standard of living, 7.8% affirmed that it has a low effect on their standard of living while 

6.7% affirmed that it has no effect on their standard of living.  

From table 3, 38.9% stated that access to financial institution has moderately increased the money spend on 

farm production activities while 32.2% agreed that the effect is high. Increase expenses on personal clothing was 



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© 2019 Conscientia Beam. All Rights Reserved. 

regarded as the least in the effect that the financial institutions has on the respondents which ranked 9th, 33.3% of 

the respondents agreed that the financial institution has a high effect on their personal clothing, 31.1% agreed that 

it has a moderate effect The Grand mean of 4.04 the respondents’ perceptions attest that the financial institution 

has a high effect on the respondents. This implies that the respondents perceived the presence of the financial 

institutions as a factor enhancing their livelihood and income. 

 
Table-3. Effects of financial institution on respondents’ income 

Effects  No 
effect 

Low 
effect 

In  
difference 

Moderate 
effect 

High 
effect 

Total  Mean Rank 

 F % F % F % F % F %    

Increase in Standard of living 6 6.7 7 7.8 0 0 12 13.3 52 57.8 77 4.39 1st 
Increase in monthly income 6 6.7 9 10 1 1.1 22 24.4 39 43.3 77 4.17 2nd 

Purchase of household 
equipment 

5 5.6 9 10 1 1.1 28 31.1 34 37.8 77 4.14 3rd 

Increased in money for farm 
production 

5 5.6 7 7.8 1 1.1 35 38.9 29 32.2 77 4.11 4th 

Payment for house rent 7 7.8 13 14.4 2 2.2 24 26.7 31 34.4 77 4.01 5th 
Money for household’s health 
care 

5 5.6 16 17.8 3 3.3 23 25.6 30 33.3 77 4.01 5th 

Increase in provision for food 9 10 16 17.8 3 3.3 14 15.6 35 38.9 77 3.98 6th 
Money for house maintenance 8 8.9 10 11.1 5 5.6 21 23.3 33 36.7 77 3.98 6th 

Increase in fund for children’s 
school  

8 8.9 9 10 5 5.6 32 35.6 30 33.3 77 3.98 6th 

Provision for children’s 
clothing 

7 7.8 11 12.2 5 5.6 33 36.7 31 34.4 77 3.93 7th 

Increase in money for personal 
clothing 

9 10 16 17.8 2 2.2 20 22.2 30 33.3 77 3.88 9th 

Grand mean    4.04  
  Source: Field survey, 2017 

 

3.4. Challenges Faced by the Respondents 

From the survey as shown in table 4, 53.3% affirm that the financial institutions give loan at high interest rates, 

23.3% complained of the government policies, 20.0% affirmed that there is no collateral security to access loans, 

14.4% of the respondents affirmed that there were no financial institution in their community, 3.3% affirmed that 

they have no encounter with the financial institutions, 8.9% affirmed that they lack linkages to credits, 8.9% 

affirmed that there are no guarantors and surety to stand in for them, 5.6% affirmed that there is problem of land 

tenure system in their community, 2.2% affirmed that they have no membership certification with the financial 

institutions, 1.1% complained of delay in issuing of loans by the financial institutions, 1.1% affirmed that expected 

amounts are not usually given to them. This implies that majority of the respondents affirmed that most financial 

institutions give out loans at high interest rate. This is the major problem of the respondents that prevents the 

respondents from gaining access to financial benefits. 

 
Table-4. Distribution according to challenges faced by the respondents 

Challenges  Frequency Percent (%) 

High interest rate 48 53.3 
Government policies 21 23.3 
No collateral security to access loan 18 20.0 
Financial institution is not available 13 14.4 
Absence of guarantor and surety 8 8.9 
Lack of linkages to credit 8 8.9 
Problem of land tenure system 5 5.6 
No encounter with them 3 3.3 
Non membership with financial institution 2 2.2 
Not giving out expected amount 1 1.1 
Delay in issuing of loan 1 1.1 

                   Source: Field Survey, 2017 

 



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3.5. Hypothesis  

Ho: there is no significant relationship between community financing institutions and cassava farmers’ income. 

The result of the test statistics in table 5 shows that there is a significant relationship between rural financing 

institution and cassava farmers’ income. The chi-square value of 6.07 is significant at 0.05 level of significance since 

the p-value of 0.014 is lesser than 0.05.  

Therefore the null hypothesis is rejected. This means that there is a significant relationship between the rural 

financing institutions and the cassava farmers’ income. The implication of this is that the respondents’ income is 

affected by the presence or the absence of the financial institutions. This could only be because processors cannot 

increase supply beyond the output they can produce. Even if financial institutions were to be present in the 

community, they cannot sell or supply beyond what they get from their production which can lead to increase in 

financial income of the farmers [2]. 

On policy implication, these major determining factors could be more locally enhanced through a proper 

formulation of policy which involves low interest rate by the government, this will facilitate a proper access to 

credit by the farmers which will promote the livelihood of the respondents. 

 
Table-5. Chi-Square Analysis 

Variables  Chi square value Assymp. Sig (2-sided) Remark  

Rural financing institution * farmers income 6.07 0.014 Significant 
Source: Field survey, 2017 

 

4. CONCLUSION 

The study has critically examined the effects of the various community financing institutions in the study area. 

It reveals that there are financial institutions in the community but majority of the people were not able to gain 

access and benefit from those financial institutions as a results of the high interest rates and unfavorable policies by 

the financial institutions. The study shows that easy access to credit is the major factor which could enhance 

respondents’ livelihood activities. More so, the high interest rate was the major constraints that hindered livelihood 

activities of the respondents in the study area. It was recommended that government should establish more 

financial institutions targeting the farmers in rural areas with the mandate to make credit available to farmers at 

low interest rate especially the cassava farmers. 

 

Funding: This study received no specific financial support.    
Competing Interests: The authors declare that they have no competing interests.  
Contributors/Acknowledgement: Both authors contributed equally to the conception and design of the 
study. 

 

REFERENCES 

[1] F. Akinola, "The challenges of agricultural finance in Nigeria: Constraints to sustainable agricultural and economic 

revival," International Journal of Business and Social Research, vol. 3, pp. 234-244, 2013. 

[2] A. A. Adeniji, L. A. Ega, M. O. Akoroda, A. A. Adeniyi, B. O. Ugwu, and A. D. Balogun, Cassava development in Nigeria: 

Department of Agriculture Federal Ministry of Agriculture and Natural Resources Nigeria. FAO, 2005. 

 

 

  

 

 
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