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Effects of Membership Homogeneity on the Performance of Agricultural Micro-Credit Groups in Enugu State, Nigeria

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Effects of Membership Homogeneity on the Performance of Agricultural Micro-Credit Groups in Enugu State, Nigeria.


The study was conducted in nine Local Government  Areas  selected  from  Enugu State. Six five micro Credit Groups from each Area were  randomly  selected. This gave a total of forty-five (45) micro-credit groups. This was done using multi-stage sampling techniques. Sources of data were primary and secondary.

Structured questioners were used to interview respondents to generate primary data while secondary data were sourced from relevant publications. Descriptive statistics and Ordinary Least Square Econometric techniques were used in data analysis. Majority of the group members, 31.4% belong to the age bracket of 40 – 49 years (middle age).

Majority of the groups, 40% were composed of 10–15 individuals. Majority of the respondents, 64.4% travel about 200 meters to attend meetings. Factors determining repayment were homogeneity in gender, occupation, distance and residency as well as social cohesion.

Based on the findings, it was recommended that micro credit groups should be homogenous with respect to gender. Members should be  encouraged  to attend group meetings which should be made to be regular in order to build strong social cohesion, and groups should be composed of individuals living close to each other in order to enjoy information advantage.


Agriculture in Nigeria, a developing economy, has suffered  serious  setbacks due to: under capitalization, poor credit disbursement procedures, inadequacy of credit institutions to cater for the needs of the teaming population of farmers and poor loan repayment possibilities among farmers (Ugo 1973, Oshontongun 1973).

Micro credit is about providing services to the poor who are traditionally not served by the conventional financial institutions (Upton, 1997). Credit agencies are frequently classified into two groups: formal and informal (Upton, 1997). Formal institutions include banks and co-operative credit unions, while the informal agencies include non-governmental organizations (NGOs), money lenders,  friends,  relatives  and micro credit unions.

The formal financial system in Nigeria traditionally lend to medium and large entrepreneurs, which are judged to be creditworthy, and who can provide tangible collateral. They avoid doing business with the micro entrepreneurs and their micro enterprises because the associated cost and risk due to inability to  provide collateral  are considered to be relatively high (Anyanwu, 2004).

Informal credit institutions are characterized by flexible small operations and they operate mostly in a circumscribed area or a specific niche of the market. They  tend to deliver personal services very close to the location of the borrower. They also tend to be non-bureaucratic and much more flexible in respect of loan purpose interest rates, collateral requirements, maturity periods and debt rescheduling (Ghatak and Guinnane, 1999).

Formal financial system in Nigeria despite the government intervention by providing a multiplicity of credit institutions over the years, have proven to be inefficient and costly in the provision of financial services to the micro entrepreneurs. However, several types of informal institutions have efficiently serviced  a  wide  variety of micro credit entrepreneurs.


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Agbo, F.U. (2006). Access of Cooperative Societies to the Services of Cooperative Development Agencies in Nigeria. Ph.D. Dissertation. Dept. of Agric. Economics, University of Nigeria, Nsukka.

Anyanwu, C.M. (2004). Micro-Finance Institutions in Nigeria: Policy, Practice and Potentials. Paper Presented at the G24 Workshop on “Constraints to Growth in Sub Saharan Africa” Pretoria, South Africa.

Arene, C.J. (1992). “Loan Repayment and Technical assistance among small holder Maize Farmers in Nigeria” African Review of Money,  Finance and  Banking, No. 1, pp 63-74.

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CSN Team.

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