COMPARATIVE ANALYSIS OF AGRIBUSINESS FINANCING BY MICROFINANCE BANKS AND MICROFINANCE INSTITUTIONS IN RURAL AREA OF DELTA STATE, NIGERIA

Abstract

The study compared Microfinance banks and Microfinance institutions in financing agribusiness enterprises in rural areas of Delta State, Nigeria. Multi-stage random techniques was used to select 150 agribusiness enterprise respondents used for the study. Five (5) Microfinance banks (MFBs) and 15 Microfinance institutions (MFIs) operating in the study area were used for the study. Primary data was collected with the use of structured questionnaire and analyzed with descriptive statistics. Findings revealed that MFBs and MFIs undertook group lending; although MFBs were also engaged in individual lending. Similarly, MFBs and MFIs loans were not secured by tangible collaterals instead they are secured by group collaterals although MFBs still insist on tangible collaterals on individual loans. MFIs disbursed 73.70% of the total amount and MFBs disbursed the remaining 23.30%. In sectorial disbursement, the product sector was the most financed followed by the input sector while the production sector was the least financed. Findings also showed that beneficiaries of MFBs and MFIs had different perceptions on granting of loans. MFBs and MFIs agreed that there was high repayment rate of loans by rural agribusiness enterprises but difficulty in savings mobilization. However, both disagreed on cost of processing loan and that there was high premium on insurance. Recommendations made were that the regulatory bodies should monitor the activities of the MFBs and MFIs; there should be improvement in their timeliness of granting loans; and there should also be improvement on infrastructure in the rural areas.