Analysis Of Poverty Status Of Forest Dwellers In Coastal Communities In Ondo State
Analysis Of Poverty Status Of Forest Dwellers In Coastal Communities In Ondo State
Abstract
This study analyzed poverty status of forest dwellers in coastal communities of Ondo State, Nigeria. Ten communities were randomly selected in the coastal region of Ondo State. In the two local government areas that were selected, two sets of structured questionnaires were administered to ten randomly selected respondents in each of the communities visited. The result of the study shows that 60% of the respondent in both communities has no formal education. In Okitipupa, 50% of the respondents earn₦ 80,000-₦100,000 while 44% of the respondents in Ese-odo community earn between ₦60,000-₦80,000 per annum.
This study also showed that 38% and 36% of the respondents in Ese-odo and Okitipupa community respectively have transportation problems. The Lorenz curve in the study show the cumulative income share against the percentage of forest dwellers indicates that there is inequality in the income of the respondents. Government should help provide good roads and health centers in the rural areas of the study area. This will help to solve transportation problem faced by many of the forest dwellers of the study area. By providing health centers, many of the respondents that are faced with ill-health problems will have access to better health services. forest dwellers
Chapter One
Introduction
1.1 Background to the Study
Poverty is unrelenting and implacable enemy with a collection of weapon of child death, starvation, disease, illiteracy, violence, child trafficking just to mention a few. It furthermore can been as a circumstances where some group with similar characteristics continuously undergo deprivation with respect to fundamental necessities such as shelter, food, healthcare, education, access to communication tools , clothing among others. Moreover, others describe poverty as people or families with earnings under a certain threshold level regardless of their standards of living. This definition comprises low level of earnings, inaccessible healthcare facility, poor hygienic condition, lack of portable drinking water, high level of illiteracy rate, poor security and protection from preventable crime among others. (Nii K. 2002).
Poverty is a world phenomenon even though is more endemic in developing countries than the developed world. Records have it that seventy-five per cent of the world‟s poorest countries are located in Africa. In the last 30 years, extreme poverty incidence globally has decreased (from 40% to below 20%) but has little effect in African countries. Currently, in sub-Sahara Africa, more than 40% of people live in extreme poverty (our-africa.org)
In the case of Nigeria, even though successive governments‟ implementation of policies had led to general decline in the poverty incidence in the country, poverty is still a force to reckon with in the deprived rural communities. It is unarguable that more than half of the nation‟s population lives in rural areas. Currently, poverty in the rural areas has become a great concern in the country making the poor people and their various deprived regions to live in absolute low standard of living environments. Records have it that, the poorest areas in the country are the three northern regions where individuals encounter chronic food insecurity and high level of illiteracy among the host of others. However, there are pockets of poor and extremely poor people in every region in Nigeria.
The poverty situation in Nigeria is cyclical one that the Government and other development partners have developed various policy interventions to help reduce it. Some of the intervention strategies adopted by government include; the National Youth Employment Program (NYEP), Livelihood Empowerment Against Poverty (LEAP), National Health Insurance Scheme (NHIS) and Microfinance and Small Loans Scheme (MASLOC) among
others.
The NYEP was created in 2006 to help reduce the increasing level of youth unemployment with the desire to empowering Nigeriaian youth so they could add positively to the socioeconomic and sustainable development of the nation. This initiative had spread to rural areas where they employed the youth in the rural communities into one of the modules in the programme called youth in agriculture. This generated a source of livelihood for the rural folk‟s hence reduced extreme poverty among them.
LEAP is a government social cash grant programme which provides cash and health protection to extremely disadvantaged individuals or households across Nigeria with at least one of three demographic categories; households with orphan or vulnerable child (OVC), elderly disadvantaged and person with extreme disability who are weak to involve themselves in any economic activities. The main objective behind this programme is to help eliminate extreme poverty among poor households in the country more especially in the rural communities. It is believed that the beneficiaries of this intervention are poorer than the country‟s rural average with a daily per capita expenditure grossly 85 US cent.
The MASLOC is a microfinance apex body responsible for implementing the government of Nigeria microfinance programmes targeted at reducing poverty, creating jobs and wealth.
MASLOC does not only disburse micro and small loans to its clients but further provides business advisory services, preparation and capacity building for small and medium scale enterprises (SMEs).
The above policy interventions are premised on the ideology that poverty is extreme in rural communities in Nigeria and the fact that the poor lack the ability to escape from extreme poverty themselves. The objective of these interventions is to eliminate extreme poverty and not to eradicate poverty in its entirety. It is therefore clear from global perspective that poverty reduction needed direct financial interventions in the rural communities.
Microfinance has been accepted by all stakeholders including governments, foundations, community development groups, non-governmental organizations and even for profit private firms because of its efficacy to helping reduce the level of extreme poverty among the poor in the rural communities.
The idea of microfinance has been in the system for several centuries. During those periods, a lot of savings and credit groups that have operated for centuries include the “susus” of Nigeria, “chit funds” in India, “tandas” in Mexico, “arisan” in Indonesia, “cheetu” just to mention few as well as numerous savings clubs and burial societies found all over the world („The New Vision of Microfinance,2004) . According to the New Vision of Microfinance 2004, available proof points to the fact that, one of the first microcredits in Africa was established in Northern Nigeria in 1955 by some Canadian Catholic Missionaries. Susu, which is we commonly associate with microfinance is believed to have come from Nigeria and now a household name in our society spread (The New Vision of Microfinance 2004).
Schreiner and Colombet (2001), microfinance is the attempt to help the poor and the vulnerable gain access to small credit as well as get the opportunity to make deposit or save which they were denied by the traditional banks.
Therefore, microfinance involves not only the provision of financial services such as savings, loans but also insurance to poor people living in both urban and rural communities who are denied financial services from the formal financial sector. The providers of microfinance services include Rural Banks, Savings and Loans Companies, Credit Unions, Susu Companies among others.
It also involves lending to clients who do not have required collateral, recognized business accounts or a reputable credit history. Individual collateral is substituted for by group collateral. This makes it possible for people in the catchment areas of Region bank Bank to access microfinance services provided by the bank.
1.3 Statement of Problem
The emergence of microfinance institutions has helped to reach out to the unbanked population in the country especially the poor both in rural and urban areas. The main aim of this institution is to complement government and other Non-governmental organizations effort to help alleviate the level of extreme poverty among the unbanked poor in the rural communities (Chirwa, 2002). Various microfinance institutions and other stakeholders like government appear to take the impact of the microfinance interventions for granted. The problem with government providing microfinance services for the rural poor is that, the rural folks see the funds as free with no intention to pay back. This has affected other institutions that provide the same services negatively (Ashun, 2010).
This condition is compelling many microfinance institutions to move away from providing funds to the rural folks to the urban areas because these institutions must make profit to be in business and for their investors. This situation makes it difficult for these service providers to meet the rationale behind their establishment. It is on this premise that this thesis want to find the loan portfolio that the bank Region bank Bank disbursed to microfinance clients, the default rate, repayment rate, responses towards the fund and financial progress before and after the receipt of the loan over a particular period of time.
1.4 Research Objectives
The broad objective of the study is to analyze the role of Region bank Bank in helping to alleviate poverty among the poor in its catchment area.
The specific objectives of this study were to ascertain whether or not;
- Microfinance services rendered by the bank help improve the businesses of the poor household in its catchment area.
- Provision of microfinance services by the bank helps the poor households in its catchment area to improve their livelihood.
- A microfinance service is really able to reach out to the unbanked population among the poor household in Coastal region of Ondom state.
1.5 Research Questions
- Has the microfinance services rendered by the bank helped improve the businesses of poor households in its catchment areas?
- Has the provision of microfinance services by the bank helped the poor households in its catchment area to improve their livelihood?
- Has the bank really able to reach out to the unbanked population among the poor households in its catchment area?
1.6 Rationale Behind the Study
The study brings to light the extent to which microfinance activities of rural banks is helping to reach out to the unbanked poor in rural communities. This therefore helps policy makers to identify the vulnerable communities and mount tailor-made services for them. The study as well outlines the challenges faced by the various institutions providing microfinance services to the poor and see how best they could improve on it to meet the set target.
The study also highlights the contribution made by these rural banks to help government and other development partners‟ effort to help lift the rural poor out of chronic poverty to an acceptable standard of living.
Finally the study unveils the extent to which the poverty alleviation/micro credit program has succeeded. It would also show if the rural poor have been able to move themselves from endemic poverty through the acquisition of household assets, pay their children‟s school fees and are able to feed themselves.
1.7 Organization of the Study
This thesis comprises five main chapters. The first chapter talks about the introduction which involves the background, the objectives of the research and provides the rationale behind the study. The second chapter deals with necessary literature review on issues like microfinance, concept of poverty, Government policy interventions to alleviate poverty etc. Chapter three will look at methodology that would be used. It briefly looks at the population, the size of the sample and sampling procedures, data collecting instruments, data administration as well as analysis of data. Chapter four will be devoted for the discussion of the results from data collected from the field and from the books of Region bank Bank. The final chapter then looks at summary, conclusions and recommendations.
Chapter Five
Summary, Conclusion and Recommendation
5.1 Summary of Findings
More respondents when asked the positive impact of accessing microfinance credit, they gave multiple answers. Majority of the respondents said they were able to increase goods bought (raw materials for their businesses) and at the same time increase initial capital as well as paying for goods in cash.
When respondents were asked the sources of their finance before joining the microfinance, more than half of the respondents said they purchase goods on credit followed by finance from family members. It‟s only few respondents who said they got their finance from money lenders, friends and personal savings.
The second research question was about how the provision of microfinance by the bank helped improve the living conditions of poor households in its catchment areas. When respondents were asked how the services of the microfinance helped them improve their living standard, majority of them stated that they are now able to provide basic needs of their dependents which include clothing and school fees followed by provision of basic needs and saving at the same time. This means that more parents can now buy their wards adequate school materials to facilitate their education.
The question on how respondent‟s meal or food intake has changed after joining the scheme, more than half of the respondents affirmed that their meal have significantly improved. This means that if before joining the scheme, respondents use to have one meal a day, now they can enjoy more than one meal per day whereas only few respondents said their diet have not improve much.
On the ownership of homes before joining the scheme, more of respondents have never live in their own home before joining and even after joining the scheme. According to majority of respondents, their concentrations are more on providing the basic necessities of their dependents and investing in their businesses in other to end the vicious cycle of poverty and when they are stable financially, they will build.
On the acquisition of household assets, more of respondents owned TV, radio sets, mobile phones and bicycle/motors before joining the microfinance scheme but with respect to gas stove and refrigerator, more respondents acquired the items before joining the scheme. On the ownership of vehicle, it was only one respondent who said she acquired the item after joining the scheme.
5.2 Conclusions
The study of the field data discovered that, majority of the respondents are petty traders followed by food vendors. Farming, agro-processing and fashion are in the minority. The credit allocated to the microfinance sector is 38 per cent of the total loan portfolio of the bank. Apart from the dominant economic activities, other individuals access the microfinance credit for household consumption which becomes increasingly difficult for them to repay the loan and since its group guarantee, the group members have no option than to contribute and pay.
5.3 Recommendations
The following recommendations are given as a result of the finding from the field work;
The finding of the research revealed that out of 70 respondents, only 5 farmers benefited from the microfinance credit. This is because more men are involved in farming than women yet men have been disqualified from joining these groups or forming one in order to benefit from the credit provided by the bank. Therefore, to improve farming in order to help alleviate the level of poverty in rural areas, men must be included in the formation of the groups and monitored strictly to ensure that they repay the loan. This in the long run will help diversify agriculture and improve the living conditions of the rural poor.
The bank must also expand its microfinance activities to cover more people who are qualified for the credit. This will help the rural people who sit idle because of lack of initial capital to start their businesses to be more proactive to enable them contribute meaningfully to living standard of their families. This will help increase the economic activities of the rural communities, hence reduce extreme poverty.
The capacity of the microfinance of the bank must be enhanced so it can cover more communities in the rural areas. This means that the bank alone cannot do this work because the bank has competing needs which are equally important. Government and other development partners must provide enough funds to the rural banks to embark on mass microfinance activities in the rural communities since they know the terrace more and are able to recover the loan with low level of default rate.
The bank officials should make it a point to visit their microfinance customers at their business places in order to encourage them and advise them on best practices to enhance the growth of their businesses. This will help boost the morales in their customers and as a result will enable them to open up on the problems that they are facing in their businesses to the
officials.
There is also the need of the bank to develop client-friendly products and wide range of products which are relevant to the needs of rural folks especially the poorest of the poor. This will encourage them to own the products and work assiduously to improve their conditions.
More so, the bank must be ready to invest into research in order to render tailor-made services to the local people. Market research helps to predict and control cost to better innovate and to maintain practical geographical coverage. This will ensure that loan officers are not over-stretched and can have effective follow-up with clients.
There must be a regular staff training to improve operational efficiency, sustainability and outreach. This training includes financial management, credit and savings management and methods. Staff training creates social ties between staff members and strengthens overall morale, loyalty and the institutional identity.
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