Abstract:
This study was an empirical analysis of the effects of membership homogeneity on the design and performance of formal agricultural micro-credit groups in Southeast,Nigeria. Specifically, the study examined the nature of the design characteristics (Credit allocation method, Credit size and membership size) and also assessed the performance(Loan repayment, Savings mobilization and Meeting regularity) of the formal agricultural micro-credit groups with regard to their functions in financial intermediation. The study also determined the effects of membership homogeneity (Same age, education,occupation, tribe, religion, marital status) on the design and performance of the formal agricultural micro-credit groups in the study area, as well as challenges from the viewpoints of the group members and operators of micro-credit. Two hypotheses were investigated to enhance the understanding of each set of design and performance characteristics and hence explain their relationship with one another. The relevant data for the the research were obtained from 24 local government areas purposively selected because people of the same linguistic group inhabit the Southeast and have the same characteristics. The presence of many homogeneous farmer groups was also established in all the states. Structured questionnaires, oral discussions and participatory observation were techniques adopted to generate the required data used in the analysis. In all, 260 respondents were randomly selected and interviewed. Formal finmcial institutions like the Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB) and Community Banks in the two states were also sampled. Descriptive statistics, ordinary least square and binomial logit regression models were used to analyze data obtained. Major findings were that: homogeneity of groups does not confer on formal micro-credit agricultural groups any special advantages in terms of design and performance. The study noted that homogeneity of some parameters has no significant effect on some group design and performance elements while it has some significant effect on others. From the findings, homogeneity of some parameters such as tribe, occupation and religion has significant effects on performance characteristics of the groups in terms of loan repayment, and homogeneity in location, age, tribe, education and religion has significant effect on performance characteristics of meeting regularity, which also enhances repayment ability. Contrary to expectation, occupation and marital status expected to have effect on the level of savings mobilization did not matter after all. It was noted from findings that policy decisions which place emphasis on homogeneity in designing micro-credit activities focusing on savings mobilization may not likely return robust outcomes. Based on the findings, demand for micro-credit services by formal agricultural micro- credit groups in the study area has two different dimensions, quantity and quality. The qualitative aspect has to do with access to credit while the other aspect is the savings mobilization aspect regarded as the most important dimension of rural financial services. The study, therefore, recommended among others that homogeneous groups should be used in targeted cases as it has no special advantages on all group design and performance characteristics Also, it is recommended that savings mobilization by farmers groups should be encouraged. Participatory approach to enhance the capacity of the FMAG operators to inculcate in them the special skills required for scaling up and scaling out as well as efficient and effective operations of the system should be adopted
