Abstract
The velocity of micro finance among User Groups in Delta State was investigated. Snow ball sampling technique was adopted in selecting 15 micro finance Users Groups for the study A five – year panel data (2000 – 2004) was collected with the aid of questionnaire Data collected was analysed with the aid of descriptive statistics, efficiency model, regression and correlation models. The result of the study shows that a mean of N18,655.33 was purchased by each member as loan, while a mean of N14,965.50 was repaid by each member of the group. Since the mean amount repaid is not significantly different from mean amount borrowed, 1.86 (P>0.05), the null hypothesis which states that there is no significant difference between the amount borrowed and amount repaid was upheld. This implies that the micro finance user groups were efficient in loan repayment/recovery ability. The micro finance users groups recorded loan marketing efficiency of 80.20%. A historical coefficient of variation of 14.77% and 13.8% indicate a relatively high velocity (steady growth rate) in amount of loan distributed and recovered respectively. It was therefore recommended that micro finance user groups should form linkage with financial institutions for the purpose of credit mobilization scheme. Also government policy of financial injection to transform the economy should adopt user group approach as a strategy.
Highlights
As farming in Nigeria is gradually transformed from a subsistence to commercial orientation, capital and finance challenges tend to become increasingly important
The amount of credit disbursed by micro finance User Groups in the study area within the period of the study is presented in table 1
The result shows that the mean amount of N18,655.33 was disbursed to members of farm credit Users groups within the period of the survey with a historical standard deviation of N2755.79 and historical coefficient of variation of 14.77% indicating credit velocity 14.77% per year
Summary
As farming in Nigeria is gradually transformed from a subsistence to commercial orientation, capital and finance challenges tend to become increasingly important. World Bank (2008) maintained that the main determinants of inefficiency of lending institutions could be traced to high default rates and high transaction costs for processing, (i.e. cost of loan monitoring and cost of enforcing small loans). These factors tend to increase the break-even rate in credit marketing. Efficiency of farm credit Users-Groups may determine how well they could maintain competition with other lending institutions in credit market. Investigating the efficiency of micro finance user group will demonstrate how well they are able to fill the gap between their members and formal lending institutions in Delta State, Nigeria. (iv) estimate the relationship between loan traded and recovered by microfinance Users Groups in the study area
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