Comparative Study of Access of Group and Individual Farmer-Clients to Financial Services of Microfinance Institutions in Enugu State, Nigeria

Abstract

This study compares the access of group and individual farmer-clients to the credit services of microfinance institutions in Enugu State, Nigeria. The study was designed to ascertain specifically the factors that determine access, the reasons for differences in the levels of access by the respondents as well as their perceptions of the effects of the credit guidelines of MFIs on their levels of access. A total of 72 respondents, 36 individuals and 36 groups, were randomly selected for the study. Multiple regression analysis, Levene’s test for equality of means as well as Likert Rating Scale were used for data analysis. Regression result showed that years of experience in farming, size of farm, credit history, size of income from farming, value of collateral, interest rate, compulsory deposit requirement and distance to MFIs affected access for both group and individual clients. Levene’s test for equality of mean scores of the group and the individual clients were statistically significantly (p > 0.05) different. Likert Rating result indicate that MFI credit guidelines such as minimum deposit requirement, interest rate and loan size were perceived as constraints by group clients while individual clients perceived, in addition to these, provision of acceptable surety as hindrances to their access to MFI credit. Group lending option scored better than the individual option suggesting that insistence on group formation still remains a better approach to accessing MFI credit.

Keywords: Microfinance, credit access, groups, individuals