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IMPACT OF MICROFINANCE ACTIVITIES ON HOUSEHOLD LIVELIHOOD IMPROVEMENT IN CAMEROON: THE CASE STUDY OF SMALL SCALE FARMERS IN BAMENDA II POLICE CREDIT UNION (BAPCCUL) CAMEROON
Abstract
Microfinance has become very vital in local, national and global poverty alleviation debates. The popular assumption is that enabling poor households (especially farmers) access to credit and other financial services helps households begin micro entrepreneurship which would enable them improve their livelihood It is against this backdrop that this study sought to assess the impact of microfinance activities on household improvement: the case of selected small scale farmers who are members of Bamenda Police Credit Union, based in Bamenda II municipality (BAPCCU). Specifically, the study first examined the impact of microcredits, secondly, evaluated the impact of capacity building (training activities) and finally, examined the impact of group lending by BAPCCUL on livelihood improvement of small scale farmers in Bamenda II Municipality. The study adopted the sample of 97 small scale farmers selected using both the purposive and simple random methods. In order to meet up with the above objectives, primary data was gathered with the use of questionnaire administered to 97small scale farmers who had benefited from BAPCCUL activities. The responses from the questionnaire were analyzed using percentage frequency tables while a regression analysis was employed to validate the hypothesis. The findings revealed that microloans, capacity building and group lending have a significant impact on livelihood improvement in terms of living standards with an R2 value of 67% and secondly in terms of Education with an R2 value of 46% and lastly in terms of healthcare with and R2 value of 63% of small scale farmers in Bamenda II municipality. The study recommended among others, that microfinance institutions should encourage more of group lending to farmers. Also, more training programs should be organized to educate farmers on lending procedures, financial management and investment analysis. This will enable the farmers invest in income generating activities. It will also enable the farmers know how to properly manage their finances. This will be important to the microfinance institutions in that it will increase income security of the farmers thereby reducing the rate of loan default.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The global poverty crisis and resulting human suffering, environmental degradation, civil unrest and many other societal ills, are hastening the search for saleable anti-poverty approaches. These deplorable conditions are the source of the growing interest in microcredit and, more broadly, microfinance. The term “Microfinance” pertains to the lending of extremely small amount of capital to poor entrepreneurs in order to create a mechanism to alleviate poverty by providing the poor and destitute with resources that are available to the wealthy, albeit at a smaller scale (Anand, 2013).
1.2 Problem Statement
In the 2012 IMF Country Report No.12/237, Cameroon had an estimated population of 19.8 million inhabitants with close to 40% living below the poverty line. About 87% of these poor populations are living in rural areas. The UNDP 2013 Human Development Report ranked Cameroon 150th of 186 countries with about a third of the population living below the poverty threshold of US$1.25 a day in 2009 (UNDP, 2013). Earlier reports by the International Fund for Agricultural Development had shown that although the poverty level of Cameroon had improved from 51% in 1996 to 40% in 2001, poverty still remains a major issue in Cameroon with grave consequences on its populace (IFAD, 2001). This improvement of the poverty situation mainly benefitted people who live in urban areas, of whom 22.1% are poor, compared to 49.9% of poor people in rural areas. Thus, poverty in Cameroon stands out as a fundamental rural phenomenon. This is equally true for Bamenda II for there is still high rural poverty. About 70% of the rural population of Bamenda II is involved in agriculture as a main source of livelihood. The agriculture practices carried out by these set of people is subsistence with the use of rudimentary tools. In 2016, agricultural productivity has been relatively low (Chenaa & Kimengsi, 2017; Forgha, Mobit & Phungeh, 2014; Tambi, Atemnkeng & Bime; 2017). This has be blame to lack of farm credits to adopt new technologies, expand farm sizes, purchase farm inputs, and obtain labor and a host of other challenges. Climate change has worsened the situation for the farmers. Most of them do not have adequate resources to adopt strategies that can mitigate the effects posed by global warming (Balgah & Bitondo, 2016; Tingem, 2008). To be able to address these challenges, the farmers need credits. Unfortunately, accessibility has been hamper by several factors. These farmers are considered by financial institutions to be high risk clients because of the nature of their activities. The farmers do not possess the require guaranties to permit them access credit. Also, the cost of accessing credit facilities is perceived to be very high. This has translated to poor productivity which has affected the income generating ability of most of the farmers in Bamenda II municipality. Income insecurity has worsened the livelihood of farm houses. They cannot afford basic healthcare, education, food insecurity and poor dietary composition. Paradoxically, Bamenda II is host to many financial institutions with BAPCCUL being one of them. The microfinance institutions are charged with the responsibility of livelihood improvement by making available financial services (microloans, savings, and group lending, training and insurance) to the rural poor. The question is do their activities have a significant impact on household livelihood? Their services have been received with mixed perception and there is little or no documentation their contribution to livelihood improvement in Bamenda II municipality. It is against this backdrop that this study sought to fill the gap by assessing the impact of microfinance activities on the improvement of farmers’ livelihood in Bamenda II municipality.
1.3 Objectives of the Study
1.3.1. Main Objective
The main objective of this study was to examine the impact of microfinance activities on livelihood improvement using the case of small scale farmers of Bamenda Police Credit Union, Bamenda II municipality.
1.3.2. Specific Objectives
- To examine the effect of microcredits on livelihood improvement of small scale farmers in Bamenda II Municipality.
- To evaluate the effects of capacity building on livelihood of small scale farmers in Bamenda II municipality.
- To examine the effects of group lending on livelihood improvement of small scale farmers in Bamenda II municipality.
IMPACT OF MICROFINANCE ACTIVITIES ON HOUSEHOLD LIVELIHOOD IMPROVEMENT IN CAMEROON: THE CASE STUDY OF SMALL SCALE FARMERS IN BAMENDA II POLICE CREDIT UNION (BAPCCUL) CAMEROON
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