Saving and Investment Behaviour of Small-Scale Farmers in Kauru and Lere Local Government Areas of Kaduna State, Nigeria

Saving and Investment Behaviour of Small-Scale Farmers in Kauru and Lere Local Government Areas of Kaduna State, Nigeria.

ABSTRACT

The study analyzed savings and investment behaviour of small-scale farmers in Kauru and Lere local government areas of Kaduna State.

The specific objectives of the study were to describe the socio-economic characteristics of the respondents; determine the socio-economic factors that influence savings and investment in the study area; estimate the savings and investment behaviour of small-scale farmers in study area.

Evaluate the level of savings and investment made by the small-scale farmer in both farm and off- farm activities in the study area; and describe the constraints associated with savings and investment in the study area.

The two local government areas were purposively selected while the respondents were randomly selected. Information was obtained from a total of 168 farmers.

The data for analysis were collected through the use of structured questionnaires and were analyzed using descriptive statistics and multiple regression model. Results of data analysis revealed that the mean age of the farmer was 42 years.

The average savings from farm and off-farm activities were ₦ 693,560.5 and ₦ 1,064000, while, average investments from farm and off-farm income were ₦  258,054.1 and ₦ 369,352.4.

The results of the regression analysis revealed that age, household size, education, farm and off-farm income were responsible for 55% variation observed in the level of savings, while household size, farm size, farm income, off-farm income and loan obtained were responsible for 55% variations observed in the level of investment.

Many (26% and 25%) of the farmers ranked low income and inadequate capital as the foremost constraints associated with savings and investment in the study area.

It was therefore, recommended that small scale farmers should be encouraged to form cooperative societies to enable them access credit from banks as  this will encourage the accumulation of social capital in form of savings and could link –up the farmers with sources of quality input for bulk purchase. This will enable the groups to buy inputs at factory cost thereby helping to reduce cost of production.

TABLE OF CONTENTS

CONTENT PAGE
TITLE PAGE………… i
DECLARATION ……………… ii
CERTIFICATION…………… iii

DEDICATION……………… iv

ACKNOWLEDGEMENT…………………. v
TABLE OF CONTENT………………… vi
LIST OF TABLES…………… .x
LIST OF APPENDICES…………. xi
ABSTRACT……………. xii

CHAPTER ONE INTRODUCTION

1.1 Background to the Study……………. 1
1.2 Problem Statement…………………. 3
1.3 Objectives of the Study…………… 4
1.4 Justification of the Study………………. 5
1.5 Hypotheses of the Study……….. 5

CHAPTER TWO LITERATURE REVIEW

2.1 Definition of Savings and Investments ………………………………………… 6
2.2 History of Savings and Investment by Small-Scale Farmers in Nigeria……. 8
2.3 Importance of Savings and Investment for Development……………….…. 9
2.4 Relationship between Savings, Income and Investment……………..…… 11
2.5 Types of Savings and Investment ………………… 12
2.5.1 Monetized Savings …………………………. 12
2.5.2 Non-Monetized Savings…………………… 12
2.5.3 Fixed Investment…… 12
2.5.4 Inventory Investment…………. 13
2.5.5 Replacement Investment………………….. 13
2.6 Trends of Investment in Nigerian Agriculture ……. 13
2.7 General Investment in the Agriculture……………… 13
2.8 Determinants of Personal Savings………. 14
2.8.1 Level of Income………………………… 14
2.8.2 Levels of Interest Rate…….. 14
2.8.3 Availability of Savings Facilities Availability of Savings Facilities..………. 15
2.8.4 Inflation Rate………….. 15
2.8.5 Expectations………………… 16
2.8.6 Government Policy…………. 17
2.8.7 Sense of Responsibility…….. 17
2.8.8 Political Stability……………… 17
2.9 Non-Quantifiable Factors Influencing Savings…….. 17
2.9.1 Instinct for Precaution……………………… 17
2.9.2 Desire for Request………………….. 18
2.9.3 Cultural Factors and Habit………….. 18
2.10 Determinants of Investment………… 18
2.10.1 The User‟s Cost of Capital…………. 19
2.10.2 Businessmen’s Profit Expectations……………. 19
2.10.3 Existing Capital Stock…………….. 20
2.10.4 Corporate Profit Taxes……… 20
2.10.5 Technical Progress………. 21
2.10.6 State of the Economy and Government Policy…….. 21
2.10.7 Availability of Social Infrastructure……. 21

2.10.8 Period of Gestation…… 21

2.11 Reasons for Savings and Investment…………. 22

2.12 Empirical Studies on Savings and Investment……….. 22

2.13 Constraints Limiting Savings and Investment……… 27

CHAPTER THREE METHODOLOGY

3.1 Description of the Study Area………….. 29
3.2 Sampling Procedure…………. 32
3.3 Data Collection………….. 33
3.4 Analytical Techniques…………… 33
3.4.1 Descriptive statistics……… 33
3.4.2 Multiple Regression Analysis………… 33

CHAPTER FOUR RESULTS AND DISCUSSION

4.1 Socio-Economic Characteristics of Respondents…. 36
4.1.1 Age distribution ……………….. 36
4.1.2 Marital status distribution……… 37
4.1.3 Household size…………… 37
4.1.4 Educational level……….. 38
4.1.5 Farming Experience…………. 39
4.1.6 Farm Size………. 40
4.2 Determinants of Savings of Small Scale Farmers….…….41
4.2.1 Determinants of Investment of Small Scale Farmers…………… 44
4.3 Level of Savings Made by the Small-Scale Farmers from Farm Activities in the Study Area… 48
4.3.1 Level of Savings made by the Small-Scale Farmers in off- farm Activities in the Study Area……49
4.3.2 Level of Investments made by the Small-Scale Farmers in Farm Activities in the Study Area… 50
4.3.3 Level of Investments Made by the Small-Scale Farmer in Off-farm Activities in the Study Area…. 52
4.4 Constraints Associated with Savings and Investment in the Study Area…. 53

CHAPTER FIVE SUMMARY, CONCLUSION, CONTRIBUTION TO KNOWLEDGE AND RECOMMENDATION

5.1 Summary………………………………… 57
5.2 Conclusions…………………………… 58
5.3 Recommendations……………… 58
5.4 Contribution to Knowledge…………. 61
REFERENCES ………. 62

INTODUCTION

1.1 Background to the Study

Saving is of great importance in a developing economy like Nigeria. This is because of the direct bearing it has on the level of economic activity of the nation.

Similarly, within the agricultural sector, the degree of progress attained will largely depend upon what the farmers do with the additional incomes generated year to year from their farming activities .

This stems from the fact that the growth rate in the farming economy largely depends on the stock of capital built up in a farm organization and the ploughing back of such stocks in form of investment for further improvement of farm organization.

If these increments are spent on house hold expenditure, without building up the necessary infrastructure, the future economic development of the nation will be hampered.

Adequate integration of savings and investment programmes into development strategies is capable of improving resource allocation, promoting equitable distribution of income, and reducing credit delivery and recovery costs (Adeyemo and Bamire, 2005).

REFERENCES

Abalu, G. O.I., Famoriyo, S. and Abdullahi, Y.A. (1981) production problems in Nigerian Agriculture. In agricultural credit & Finance in Nigeria problems and prospects edited by Ojo M. O, Edwardu, C.C, and Akingbade.

Adams, D.W. (1978). Mobilizing Household Savings Through Rural Financing Market. Economic Development Cultural Change, 26 (3): 547-560.

Adegbite, D.A., Momoh, S. and Alalade, A. (2007). Determinants of Savings Mobilization in Ogun State, Nigeria. Journal of Sustainable  Development,  4 (1):2.

Adegboye, M.A., Eniolorunda, P.N. and Awe, O.A. (2008). Constraints to Effective Fertilizer Utilization on Maize farm in Ido LGA of Oyo State in Proceedings of 42^nd Annual Conference of Agricultural Society of Nigeria (ASN): Pp. 871.

Adesimi, A.A. (1983). “Capital Formation in Traditional Agriculture. A case study of Farm Household in Ondo Stale of Nigeria. Savings and Development, 7(2): 6-7.