International Journal of Agricultural Research and Reviews

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Effect of Microfinance on Poverty Status among Farming Households in Oyo State, Nigeria.

1Toluwase, S.O.W and 2Owoeye, R.S.



Accepted 10th October, 2016


This study examined the effect of microfinance on poverty status among farming households in Oyo State, Nigeria. Multi-stage sampling technique was used to obtain data from 160 farming households that were selected from 3 Local Government Areas in Oyo State. Descriptive analysis, FGT and Regression analysis were used to analyze the data. Results on socio-economic characteristics reveals that about 50 percent of the respondents were 40 years and below, and 77.50 percent of them have been married. Also, 58.13 percent had between 5 and 8 persons as their household size while 38.75 percent indicated less than or equal to 2 hectares of land as their farm size. It was reported that 59.38 of the respondents did not have more than primary education, indicating that the respondents were poorly educated while 70.01 percent of them had less than or equal to 15 years of farming experience. The poverty line was taken as the 2/3 of the yearly per capita income and thus the number of households below the poverty line was 58, that is, 36.25% of the respondents while the non-poor was 102 or 63.75% of the respondents. The daily per capita income was ₦1918.11 and the yearly per capita income was ₦700108.98 while the 2/3 yearly per capita income or poverty line was ₦466739.32. The study observed that farming households were 63.75% non-poor due to the contribution of income from other diversified activities to the households. The regression estimate for the microfinance users indicates that educational level, ownership of assets and income source were statistically significant at 1 percent, indicating that these variables determine poverty among the microfinance users in the study area. Also, regression estimate on the microfinance non-users among the farming households revealed that educational level, income source, farm size and interest charged in naira were all statistically significant at 1 percent. These variables influenced poverty status of non-users of microfinance. It is therefore recommended that provision of educational programs and accessible credit schemes to facilitate the establishment of farm and off-farm businesses should be encouraged.


Keywords: Microfinance, Poverty, FGT, Regression Analysis.