ASSESSMENT OF THE EFFECTS OF MICRO-CREDIT ON POVERTY STATUS OF MICRO ENTREPRENEURS IN IKERE EKITI, NIGERIA

Abstract

This study investigated how engagement in microcredit programs impacts the poverty status of microentrepreneurs in the Ikere Local Government Area of Ekiti state, Nigeria. The study selected 126 respondents through random sampling, comprising 57 microcredit beneficiaries and 69 non-beneficiaries. Data was gathered via structured questionnaires and analyzed using various statistical methods including descriptive statistics, FGT poverty measure, Probit regression, and comparison of means.The average per capita household expenditure in the study area was N 13,877.49, which was used to establish poverty thresholds of N 9,251.66 and N 4,625.83 for categorizing households as moderately poor and core poor respectively. The findings revealed a poverty incidence of 27 percent among microcredit beneficiaries and 29 percent among non-beneficiaries.Probit regression analysis indicated that female-headed households tended to be economically disadvantaged compared to male-headed ones. Furthermore, each additional year of formal education, possession of assets, and participation in microcredit were associated with reductions in poverty status by 0.994, 0.0529, and 0.08 respectively.A comparison of expenditure between microcredit beneficiaries and non-beneficiaries revealed higher expenditure among the former. The study suggests that policies promoting the establishment of more microcredit groups for impoverished households could be effective in alleviating poverty.