THE IMPACT OF MICROFINANCE BANKS ON AGRICULTURAL DEVELOPMENT
ABSTRACT
This research work, the impact of microfinance bank on agricultural development, the growth of agriculture on any economy is dependent on the access of loan to farmers especially to low income farmers. The main aim of this study is to determine how microfinance institutions have assisted farmers to getting access to loan so as to boost agricultural  development. The objectives of this study were to find out.
1.    The impact of microfinance bank on agricultural development in Nigeria.
2.    To find out how the microfinance banks contribute to poverty reduction.
3.    To ascertain what improvement microfinance banks contribute to agricultural development.
4.    To critically examine the fact that the entire microfinance activities in Nigeria have contributed to the gross domestic product and agricultural growth in Nigeria.
The research is also aimed at enlightening farmers.
1.    On how they can access loan asset based collateral.
2.    The possible problems they could encounter in accessing loan from microfinance banks.
The research was conducted using secondary data, ordinary least square regression was used to analyse the collected data and the following findings were obtained.
i.    Micro financing institutions should be adequately financial so that farmers especially in  the rural areas will have access to loans to boost agricultural development.
ii.    Government policy should impact on inflation as this macroeconomic variable can negate the effect of microfinance on the GDP.       
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
1.1    Background                         
1.2    Statement of the Problem                
1.3    Objective of the Study                
1.4    Hypothesis of the Study                
1.5    Participant Hypothesis                
1.6    Significance if the Study            
CHAPTER TWO
2.1    Introduction                    
2.2    Historical Development of Microfinance
Bank in Nigeria                    
2.3    Rationale for Micro-Finance in Nigeria         
2.4    Goals of Micro Finance Banks        
2.5    Policy Frameworks on Micro Finance
in Nigeria                            
2.6    Challenges of Micro Finance Bank In Nigeria         
2.7    Sources of Funds for Micro Finance
Institutions in Nigeria               
2.8    Contribution of Microfinance to Agricultural
Sector in Nigeria                         
CHAPTER THREE
3.1    Research Methodology                    
3.2    Theoretical Framework            
3.3    Technique of Analysis                
3.4    Source of Data                        
3.5    Data for Regression                    
CHAPTER FOUR
4.1    Presentation of Regression Result                 
4.2    Interpretation of Regression Result         
4.3    Policy Implication                    
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1    Summary of Findings                        
5.2    Conclusion                            
5.3    Recommendations                    
    Appendix                             
    Bibliography                     
CHAPTER ONE
INTRODUCITON
1.1    BACKGROUND
    Nigeria has been blessed with vast and fertile land, rivers, lakes forests, swamps and grassland. Despite this abundant endowment, the agricultural sector has experience declined productivity. The contribution of agriculture to total GDP fell from 58.2% in 1960 through 41.3% in 1970 to 40.4% in 1999. However agriculture remained the main stay of the nation economy with an average contribution to the GDP of 34.90 for the period 1970-1978 despite this however productivity with an average growth rate of 84% between 1971-1995 this has fallen over the years to as low as 2.3% between the period 1991-1998.
    The major reason is the relative increase in the fortune of oil, which necessitated the swapping of resources and interest from agriculture of the oil sector. In addition the characterization of the Nigerian agriculture is dualistic (i.e simultaneously practicing peasant farming and modern large scale farming).
    Attaining sustainable development has evaded the development countries for several decades due to continued failure to integrated all segments of the society. The system has not provided the majority of poor people with secured access to credit for investment to agricultural productive sectors. Successive government efforts to solve the problem of agriculture through several rural finance and development programs have met with an unsatisfactory result. This was due to lack of mechanism which would encourage the mobilization of saving among people at the grassroots level and the same time simplify the distribution of fund through loans and advances. Due to this problem the rural banking scheme was established by the central bank in 1997. These rural branches failed to meet the credit needed for the people and remained more deposit taker.
    The commercial bank was set up to provide but the loan was not met for long term investment as their sources of fund are the short term funds. The merchant bank was established for the purpose of providing for both long and medium term loans. This was not able to meet the financial need of the people because the banking services were united to some specific areas like deposit taking and short term loan. So little for the long term so to be able to extend banking services toe the people in various levels, the development banks was established as specialized financial institution providing long term credit for the creation and expansion of productive activities in some sector of the economy (agricultural industry and commerce) even then the needs of the low income earns in terms of credit facilities was not meet.
    A community bank is a self sustaining financial institution owned and managed by a community of groups of communities, providing credit and other banking and financial services to its members. These banks are wholly owned by community development association, corporative society farmers, age groups, indigent and corporate bodies of the local government level. They are licened by the national board for community banks the first community bank in Nigeria was commissioned and started operation in December 1990 in Tudunwada local government area of Kaduna state. By the end of 1992 the number of community banks operating in the country stood at 401 rising further to 879 by the end of 1993. At the end of 1995, the number stood at 1,355, the principal of rural development by providing financial and banking services to communities in adequately supplied with such services.
    To redress the situation and unlock the potentials of these segments of the society for agricultural growth and development, the Central Bank of Nigeria at December 2005 launched the micro-finance regulatory and supervisory framework for Nigeria. The vision of the policy is to establish a viable and sustainable private micro-finance market with the government providing a supporting and appropriate policy environment and institutional framework for the orderly development of the microfinance sub-sector.
    Under the microfinance policy over 700 existing community banks are to convert to microfinance banks (MFBS) by December 2005 while the non-government organization to microfinance institutions. The policy recognizes peculiar financial services requirements of lower segment of the society and thus adapted a two tiered approach to licensing of MPIS namely which is toe complement the on going banking sector reforms has therefore totally changed the financial landscape of Nigeria.
1.2    STATEMENT OF THE PROBLEM
    The microfinance institution have been conceived to the sap within the financial system of Nigeria. Where as there is a commercial merchant and development banks in the formal credit delivery system of operation of these banks are restricted to the elite population who constitute over small proportion of the countries total population.
    The lives of the majority of Nigerians who are the rural and low income earners remain unaffected positively by the activities of these modern financial institutions.
    The microfinance institutions were therefore established to serve for funds mobilization and provision of credit mechanism to people by modern banking.
RESEARCH QUESTIONS
1.     How have microfinance performed against agriculture in Nigeria.
2.    What role does microfinance institution play in the agricultural sector?     
1.3    OBJECTIVE OF THE STUDY
    The main objective of the study is to examine the impact of microfinance bank on agricultural development in Nigeria.
1.4    HYPOTHESIS OF THE STUDY
    In the course of this research, the hypothesis to be tested are related to the study.
Ho:    Microfinance has no positive impact on the Nigeria agricultural sector.
Hi:    Microfinance has a positive impact on the Nigeria agricultural sector.
1.5    PARTICIPANT HYPOTHESIS
This study will be relevant to the agricultural development that the government will put policies that are relevant to micro-financing that will assist in agricultural development.
This study is also to show the level of which the microfinance institution have gone in making the agricultural sector to grow and the impact of the messes that are to benefit from its programmes.
Finally, this study will also be useful to the economy as a whole as it will help to improve the performance of all microfinance institutions and this will in turn improve the economy.
1.6    SIGNIFICANCE OF THE STUDY
    The significance of this study is restricted to micro financing in Nigeria, it is the plan of the researcher in the course of the study to get data from secondary source. Another constraint is financial problem for any research work of this nature to excel it requires spending a lot of money for stationeries, transport among others. Therefore the project is restricted to the financial resource available to the writer.