CHAPTER FIVE: INSTITUTIONS IN MICRO AND SMALL AGRO – ALLIED PROCESSING ENTERPRISES: IMPLICATIONS FOR POVERTY ALLEVIATION IN EBONYI STATE, NIGERIA.



5.0             Discussion
5.1      
The results of the study were discussed under six sections (5.1 – 5.6) taking into consideration the six objectives and four hypotheses for the study.  Each section attempted to answer the research questions in line with the findings from the research.


5.1.1       Agro – Allied Micro/Small Processing Enterprises and Related Institutions:
The three selected micro and small agro-allied processing enterprises are Cassava, Rice and Oil Palm Fruits.  The institutions that are related to the establishment and development of micro/small agro-allied processing enterprises in Ebonyi State include Government Ministries, Agencies and Parastatals, Financial Institutions, Non Governmental Organisations, Community Based Organisations, Business and Processing Associations and International Donor Agencies.  Among Government Ministries are the follows:
A.    i.                  Ministry of Education:  Encourage human resources development with emphasis on vocational and technical education; to improve small business entrepreneurial and management skills.  Incorporation of Entrepreneurial studies in Colleges and Universities curriculum is advocated to direct the youth towards self-reliance and employment opportunities in micro/small enterprise development.
ii.                 Ministry of Agriculture and the Parastatals:  Have the mandate for the production of food and raw materials for processing enterprises.  Agricultural Development Programme (ADP) equally provides extension services for increased food production and improved processing options.
iii.               Ministry of Finance:  Allocates and disburses fund in government budget for micro/small agro-processing enterprise development.
iv.               Ministry of Lands, Survey and Housing:  Is responsible for the allocation of land for the development of agro processing industrial estate which is non existent in the State.  The Ministry is also responsible for land titling and issuance of Certificate of Occupancy (C of O) for individual entrepreneurs.
v.                  Ministry of Local Government Chieftaincy Affairs and Rural Development:  Responsible for settlement of communal disputes, rehabilitation of rural access roads and assistance to communities embarking on self-help projects for overall rural development.
vi.               Ministry of Commerce and Industry:  Assists in registration of micro/small agro-processing enterprises and extension of micro-credit to entrepreneurs.  Provides market information and networking with trade groups to promote micro/small enterprises development.
vii.             Ministry of Works and Transport:  Ensures infrastructural development and helps reduce the cost of providing the needed infrastructure for micro/small enterprises.
viii.          Ministry of Public Utilities:  Provision of water, electricity and telecommunication to enhance enterprise development.
ix.               Ministry of Women Affairs and Social Development:  Helps in Girl Child School Drop-out vocational training, women empowerment and the less privileged in micro/small processing enterprises through extension of micro-credit and provision of processing machines.
x.                  Ministry of Justice:  Provision of adequate legal environment that guarantees property right and safety.
xi.               Ministry of Science and Technology:  Fabrication of tools and equipment for micro/small scale enterprises.

B.                               The following Government Parastatals are related to micro/small agro processing enterprises development:
i.                    National Poverty Alleviation Programme (NAPEP):  NAPEP is one of the strategies of the Federal Government to alleviate poverty in Nigeria.  In Ebonyi State many programmes of NAPEP have been executed to empower agro-processors.  These include provision of micro-credit and equipment for micro/small agro-processing enterprises establishment and development.
ii.                 National Directorate of Employment (NDE):  NDE is an employment agency charged with the responsibility to combat mass unemployment through some programmes such as Vocational Skills Development (VSD), Small Scale Enterprise (SSE), Rural Employment Promotion (REP) programmes etc.  Some unemployed youths are trained and assisted to establish their own micro/small processing enterprises.
iii.               Community Based Poverty Reduction Agency (CPRA):  The agency is a community-driven development project jointly funded by the World Bank, African Development Bank (ADB) and Ebonyi State Government.  Agro-processing is one of the sectors that has received assistance for micro/small-scale enterprises development.
iv.               Small and Medium Enterprise Development Agency of Nigeria (SMEDAN):  Is the apex Federal Government Agency devoted to promoting policies and programmes for micro, small and medium enterprise development.  SMEDAN office has not yet been commissioned in Ebonyi State but operates under the Ministry of Commerce and Industry.

C.                          Non Governmental Organisations that have helped in the development of micro/small agro-processing in Ebonyi State include the following:
i.                    British American Tobacco Foundation:  Supplied inputs as fertilizer, agrochemical, improved rice seeds and processing equipment to some farmers at Igbeagu in Izzi Local Government Area of the state.
ii.                 Sudan Mission:  Has been working with the people of Onuenyim Agbaja in Izzi Local Government in the development of agro-processing enterprises.
iii.               The Global Initiative for Agricultural Development:  Trained and employed extension agents in Ohaozara Local Government Area and has empowered many processors in micro/small agro-processing enterprises.
D.                            Community Based Organisations include Town Unions, Age Grade Groups, Social Clubs, Churches etc.  They have formed micro/small agro-processing cooperatives in the State for agro processing enterprises.
E.                             Business/Processing Associations include All Farmers Association of Nigeria (AFAN), Market Association and Processors Cooperative Unions etc.  They have assisted in the development of micro/small agro-processing enterprises though in small measures.

F.                           In Ebonyi State, the following International Donor Agencies have helped in the establishment and development of micro/small agro-processing enterprises.  They are as follows:
i.                    United Nations Development Programme (UNDP)
ii.                 United Nations Industrial Development Organisation (UNIDO)
iii.               International Fund for Agricultural Development (IFAD).

In collaboration with the State Government, these organisations have assisted the development of micro and small agro-processing enterprises.

G.                         Financial Institutions comprise formal and informal organisations.  They include Banks and non formal credit-lending outfits like money lender and Isusu etc.  Agro-processors accessed loans for the establishment and development of their enterprises through these institutions.  North (1994) asserted that weak institutions affect the performance of the enterprises which leads to poverty.  On the other hand, poverty is reduced when these institutions strongly favour the establishment and growth of micro and small agro-allied processing enterprises.

5.1.2               Micro/Small Agro – Allied Processing Enterprises and Banking Institutions in Ebonyi State:
Project officers from some banks in the state were interviewed to determine the role of banking institutions in the development of micro and small agro-processing enterprises in the past three years (2005 – 2007).  These banks comprised Community Banks, Micro Finance Bank, Nigerian Agricultural Cooperative and Rural Development Bank, Union Bank, United Bank of Africa (UBA) and First Bank.

Data in Table 1 indicates that 20% and 40% of the Banks had less than 10% and between 51% - 70% of their loanable fund for micro/small agro-processing enterprise development respectively.  The mean percent of loanable and disbursed fund was 37% and 8% respectively.  This means that out of the 37% that banks were to give as loan to processors, that only 8% was disbursed.

It implies that Banks had no impact on the development of micro/small agro processing enterprises in the State.  This agrees with Olorunshola (2001) who stated that banking sector tends to be lukewarm in meeting the credit requirement of Micro/Small and Medium Enterprises (MSMEs).

Bank officials attribute the low access of credit by agro-processors to lack of acceptable collateral.  This agrees with World Bank (2005) which stated that difficulty in site acquisition, land titling and property registration undermine MSMEs ability to use land as collateral in financial transactions.

5.1.3       Socio – Economic characteristics of Respondents and relationship between the three processing Enterprises:
Age of Enterprise Owner:
Data in Table 2 shows that none of the entrepreneurs was less than 20 years.  Majority of them 44% were in the age bracket 41 – 50 years while those above 60 years were in the minority with 3%.  Cross-tabulation result shows that there is no significant difference between the ages of the enterprise owners in the three enterprises with total mean age of 44 years.  Mean ages for Cassava, Rice and Oil Palm Fruit Processors are 43.35, 45.38 and 44.05 years respectively.
Processing is a tedious and laborious task, which is best done by the middle aged because it involves a lot of energy.  Operations in micro/small agro-processing enterprises are not only tedious and involving but very dirty, which youths are not eager to engage in.  Another reason is that agro-based enterprises do not attract high income, therefore unattractive to the youths.  This tends to result to rural-urban migration especially of youths who are more educated, innovative and sharper to comprehend and apply technical ideas and often operate more efficient business.

Household/Family Size:  Table 2 shows that majority of the processors 44% had between 6 – 10 persons in their household, while 2% had more than 20 persons.  Cross – tabulation result shows that there is no significant difference between the family size of the three processing enterprises.  It is important to note that the implication of household size on micro/small enterprises is usually beneficial in terms of unpaid labour.  Total mean size of family in the three enterprises is nine (9) persons.

This tends to agree with Ezike (1999), who reported that the average family size of farmers in South Eastern Nigeria is eight (8) persons.  It was observed that most of the operations of micro/small agro-processing were provided through unskilled family labour.

Marital Status:  Majority of the processors 92% were married while less than 1% were widowers separated or divorced.  Widows and the unmarried had 5% and 2% respectively.  Most successful entrepreneurs are married and they generally have understanding spouses who provide moral and material support.  This suggests that a form of partnership or co-operation is necessary for pulling of resources for meaningful economic ventures.  Umar (1997), reinforced the observation and noted that ownership of small-scale industries is usually family centred.

Educational Status:  It is observed in table 2 that 14% of the processors did not go to formal school.  Majority 31% had between 1 – 6 years of schooling while less than 1% acquired 20 years of schooling.  Cross tabulation result shows that there is a significant difference in the educational status of the processors in the three enterprises.  Rice processing enterprises had more number of people who had primary and secondary school education.  This was followed by Cassava processors and lastly by Oil Palm Fruit processors.  Generally the educational status of the processors was very low with nine (9) years of schooling as the mean level of education.  This agrees with Ebonyi State Blue Print (1997), which reported that Ebonyi State is the most educationally backward State and disadvantaged in Eastern Nigeria.  However, Adeleja (2004), stated that cottage/small enterprises are more of proficiency than much school qualification.  The higher the education one acquires, the lower the desire to go into micro/small agro-processing because of the low esteem it accords to people.  Hence the quality of manpower in micro/small agro-processing enterprises is very low.

5.1.4       Years in Skill Acquisition and processing:
Years in Skill Acquisition:  In table 3 majority of the Processors 84% spent 1 – 2 years in acquiring skill, while less than 1% did not have any formal training before starting their own enterprise.  The mean years in skill acquisition is two (2) years.  Cross – tabulation result shows that there is a significant difference in the years of skill acquisition for the three enterprises.

Some processors in Cassava processing did not have any formal training because it has been their means of livelihood even as children.  Consequently one does not need much apprenticeship to process Cassava.  No processor stayed up to four (4) years as an apprentice or under tutelage before establishing his/her enterprise in Cassava processing.  This could be attributed to the fact that Cassava could be processed into many products that do not require complicated and expensive equipment to establish.  However, 3% and 5% of the Oil Palm Fruit and Rice Processors stayed more than four (4) years respectively to acquire skill.

Adelaja (2004), stated that micro/small industries serve as a training ground for developing technical and entrepreneurial skills and by virtue of their location, use indigenous technological capabilities.  Micro/small agro-processing enterprise therefore, provide opportunities for the development of local entrepreneurship as well as the acquisition of technical skills, which are necessary for the sustenance and further development of non-farm enterprises.

Years spent in processing:  In table 3, 39% of the respondents spent between 6 – 10 years in processing and are in the majority while only 7% spent more than 20 years in processing.  Mean years in processing is 12 years.  Cross-tabulation result shows that there is no significant difference in the years of experience in the three enterprises.  Practice makes perfect and according to Adelaja (2004), cottage (micro) and small industries contribute significantly to living standard more in the rural areas than do large enterprises.  They promote local proliferation and contribute to the dynamism and competitiveness of the rural economy thereby reducing poverty.

5.1.5       Enterprise Characteristics:
Gender of Respondents:  Table 4 indicates that 64% and 36% of male and female processors respectively were engaged in micro/small agro-processing enterprise.  Cross-tabulation relating gender of enterprise owner and processing enterprises shows that there is a significant difference between the number of male and female entrepreneurs engaged in the three enterprises.

Location of Enterprise:  Data in Table 4 shows that 95% of the respondents live in the rural areas while 5% live in urban setting or township.  The term “Agro-allied” is related to Agriculture.  This is in conformity with Olayide et al (1981) who defined enterprises based on crops, livestock, fisheries and forestry as agro-based or allied industries.  The progress of agro-based enterprises depends on agricultural growth that is sustainable to the supply of raw materials for processing.  Through the establishment of agro-based industries, rural-urban migration would be considerably reduced because rural standard of living will be raised.  There is urgent need for government’s intervention to ease problems posed by traditional land tenure systems, which make land acquisition for modern agriculture difficult.  Ukpong (1993), suggested that State Government should assist corporate bodies or cooperatives in acquiring large parcels of agricultural land for large-scale agriculture aimed at enhancing agro-industries development in the nation.

Primary occupation and Enterprises chosen by Entrepreneurs:  Majority of the Entrepreneurs 46% had farming as their primary occupation while only 1% was not into farming.  Thirty six percent (36%) were both in farming/Non farming while 17% were Civil Servants etc.  Of the 264 processors, 39%, 32% and 29% were engaged in Cassava, Rice and Oil Palm Fruit respectively.

5.1.6       Age of Enterprises and Registration with Agencies:
Age of Enterprises and Registration with Agencies:  In table 5 majority of the Enterprises 34% had been in existence for a period between 6 – 10 years while 5% has been processing for the past 20 years.  The mean age of enterprise is 11 years.  Out of the 264 processors, 28% registered their enterprises while 72% did not.  None of the entrepreneurs registered with Corporate Affairs Commission.  Fifty-five percent (55%) and 23% registered with local and State Government respectively.  Many did not register because they felt that their business was small and no one will find out.  Others complained that registration of their business was too complicated and expensive.  While some did not know that they should register their business, some did not register to evade tax.  This goes to establish informality of the agro-processing enterprises.  World Bank (2005), stated that several analysis of business registration in Nigeria had criticized it as cumbersome, time-wasting and too costly.  They stated that companies in the informal sector would stay there if they perceive that benefits of staying informal exceed the costs of going formal.  Micro, small and medium enterprises represent the majority of new companies.  Informality hinders the growth of enterprises since they are unable to reach state-initiated services, incentives and programmes as well as formal sector opportunities for growth and development.

The MSMEs policy (2006) emphasizes the transformation and growth of informal into formal enterprises through the establishment of simplified, cost-reducing and easy business registration, tax, licensing, certification and other regulatory procedures.



5.1.7       Sources of capital at Inception of Business:
Data on table 6 shows that majority of the processors 58% started their business with their own capital saved over the years. Relations and friends helped and they represent 19% of the source of capital at inception of business.  This was followed by Cooperative Societies and money lenders with 8% and 7% respectively.  Only 5% of the processors got loan from Bank, while 2% accessed credit from Government and Non Governmental Organisations respectively.

This confirms UNDP/SMEDAN National Policy on MSMEs (2006), which states that funding of MSMEs is mainly from individual resources, with a little help from family and traditional mutual fund societies (esusu).  Government interacts very little with individual micro enterprises, except through the occasional cooperative or other officially recognised groups.  Bank loans are rarely sought and more rarely obtained.

5.1.8       Loan obtained and Sources:
Data on Table 7 indicates that 69% of the respondents did not obtain loan.  Out of the 31% of those who obtained loan, 35% and 65% accessed loan from formal and informal sources respectively.  Cross-tabulation result shows that there is no significant difference between those who obtained loan in the three enterprises.  Cross-tabulation result of source of loan by the three enterprises further shows that there is equally no significant difference between the number of processors in the three enterprises who obtained loan either from formal or informal credit source.  The level of credit acquisition was generally poor both from formal or informal source.  Majority of the processors 58% used their own capital at the inception of their businesses.  Finance is obviously not the only problem militating against the development of micro/small and medium enterprises, it is certainly the most formidable.  Anyanwu (2004) noted that Micro Finance Institutions consist of agents and organisations that engage in relatively small transactions using specialized character – based methodologies to serve low-income households, micro-enterprises, small farmers and others that lack access to banking system.  He reiterated that the experience in Bangladesh, Egypt and Kenya where Micro-Finance Institutions funded micro/small enterprise be adopted in Nigeria to impact directly on the poor through their outreach and sustainability.

Amount of loan obtained:  Majority 49% of those who obtained loan, got between N51,000 – N100, 000 while 2% got more than N200,000.  Cross-tabulation result shows that there is no significant difference in the amount of loan obtained by the processors in the three enterprises.  The mean amount obtained was N65,969, N89,329 and N63,619 for Cassava, Rice and Oil Palm Fruit processing respectively with total mean amount of N72,972.  These amount of money are grossly inadequate.  This confirms Anyanwu (2004) who stated that finance is a major constraint in MSMEs development in Nigeria.


5.1.9       Number of Informal Credit Organisation:
Data on Table 8 indicate that 12% of the processors lived in neighbourhood where there were no form of informal credit organisation.  Thirty-two percent (32%) had one credit organisation while only 1% had up to 6 of such organisations in their communities. Many of the processors 53% lived in rural areas where there were no banks.  Consequently, banks had no effect in credit acquisition by the processors because loan obtained by processors from banks was grossly inadequate.  Credit acquisition through the informal credit organisation was meagre, therefore insufficient for micro/small agro-processing development.  This still agrees with Anyanwu (2004) who noted that finance is one of the most pressing problems of MSMEs.

5.1.10  Distance of Enterprise location from Bank:
Data on table 9 indicate that out of the 123 processors (47%) who had banks in their locality, 40% lived 2km away from banks while 7% had their homes located more than 5km away from banks.  This was a handicap to the processors because of the far distance.  This still confirms Anyanwu (2004) who stated that finance is one of the hindrances to MSMEs development in Nigeria.

5.1.11  Number and Types of Organisation Entrepreneurs belonged to:
Data on table 10 indicate that 56% of the processors did not belong to any organisation while 27% belonged to only one organisation, which was in the majority.  Cross-tabulation result shows that the mean number of organisations entrepreneurs belonged to is 1.40, 1.45 and 1.45 for Cassava, Rice and Oil Palm Fruit processing respectively, with a total mean number of 1.

There is therefore no significant difference in the number of organisations the processors belonged to.  They belonged to Farmers association, local processing groups and community based organisations such as Town Union, Age Grade Groups etc.  This is in line with Onokerhoraye (1995), who reported that entrepreneurs, who establish, own and manage small enterprises display inability to mobilize resources and to take risk. He noted that they lack formal training in management and tend to have narrow range of technical or productive skills.  Since majority of the processors were not sufficiently educated, they may not be readily willing to adopt new innovations to improve their product.  They did not belong to professional organisations which resulted to low performance and this agrees with Lima (2000), who noted that without heavy investment in human development, that there will be no economic transformation or growth in the society.

5.1.12           Size of Working Capital and Value of Enterprise Assets:
Data on Table 11 show that majority of the processors 53% had between N10,000 – N50,000 as the size of their working capital while less than 1% had more than N500,000.  The total mean size of working capital is N68,936, while Cassava, Rice and Oil Palm Fruit had N74,029, N85,762 and N43,059 respectively.  There is a significant difference in the size of working capital in the three processing enterprises.  It is observed that those in Rice processing had the highest working capital among the three processing enterprises, followed by Cassava processing while Oil Palm Fruit processing had the least working capital.

Majority of the processors 40% had between N50,000 – N100,000 as their total value of capital assets while less than 1% had more than N500,000.  The mean value of capital assets for Cassava, Rice and Oil Palm Fruit processing is N184,058, N275,313 and N119,513 respectively with a total mean of N195,204 for the three enterprises.  As could be observed, Rice processing had the highest followed by Cassava processing while Oil Palm Fruit processing had the least value of capital assets.

5.1.13           Monthly Revenue from Enterprise:
In table 12, majority 43%of the processors had between N11,000 – N30,000 as their monthly revenue while less than 1% had more than N130,000.  The total mean monthly revenue is N33,379.  Processors in Rice enterprise had the highest mean monthly revenue of N45,634 as against N30,109 and 23,900 for Cassava and Oil Palm Fruit processors respectively.  There is a significant difference between the monthly revenue from the three processing enterprises.

The size of working capital, value of enterprise assets and monthly revenue from the enterprises are insufficient which still agrees with Anyanwu (2004) that finance is a major constraint in MSME development in Nigeria.

5.1.14           Age and Cost of Agro-Processing Equipment:
It is necessary to note that not all the processors had processing equipment.  Some had their inputs processed through the services of others that had processing equipment.  Out of those that had processing equipment, majority of them 31% had equipment which have lasted between 11 – 15 years while 3% had equipment which were more than 25 years old.  The mean years of usage of equipment were nine (9) years.

Table 13 also shows that 45% of the processors had equipment which cost between N10,000 – N50,000 while less than 1% had equipment worth between N301,000 – N400,000.  Cassava, Rice and Oil Palm Fruit processing had N79,030, N138,338 and N37,249 as mean cost of equipment with a total mean of N86, 915 for the three enterprises.

There is a significant difference in the cost of equipment in the three processing enterprises.  Rice processing had the highest, followed by Cassava processing while Oil Palm Fruit processing had the least cost of processing equipment.  This shows that the processors were not using adequate and appropriate equipment for processing and it posed a problem of very low grade of products.  Makinwa (1996) stated that lack of know-how, experience in good technology and lack of access to appropriate equipment is a fundamental problem to micro, small and medium scale entrepreneurs.

5.1.15  Number of Employees engaged by Entrepreneurs:
Data on Table 14 indicates that 2% of the respondents did not engage any other worker.  Majority 45% engaged between 4 – 6 workers while less than 1% had between 13 – 15 workers.  The mean number of employees is 4 workers.  There is no significant difference in the number of workers in the three enterprises.  These employees are either fulltime, apprentices, casual or unpaid workers and are mostly family members.  According to UNDP/SMEDAN National Policy on MSMEs (2006), Micro enterprises are classified under any enterprise with less than 10 employees.  This implies that the processors were micro entrepreneurs.

5.1.16           Fulltime Workers, Apprentices, Casual and Unpaid Workers engaged in Agro-processing:
Table 15 shows that 16%, 87%, 35% and 33% of the processors had no fulltime, apprentice, casual workers and unpaid workers respectively.  Forty-nine percent (49%), 6%, and 23% had one fulltime, apprentice, casual and unpaid workers respectively.  Mean number of fulltime, apprentice, casual and unpaid workers was 1, less than 1, 1 and 2 persons respectively.  This means that there were very few apprentices.

The youths seem not to be interested in micro/small agro-processing enterprise which resulted to very low youth apprenticeship.  However, there were more unpaid workers than casual or fulltime workers.  This is in agreement with UNDP/SMEDAN National Policy on MSMEs (2006), which defined a typical micro enterprise as one being operated by a sole proprietor/manager aided mainly by unpaid family workers and the occasional paid employee and apprentice.  It is important to note that, for the survival of rural enterprises, conducive enabling environment and enhanced income would attract the youths to replace the old ones in the future.

5.1.17  Assistance Received by Processors:
In Table 16, only (25%) 66 out of the 264 processors received assistance for their enterprise development.  Out of this number, 44% received training or capacity building in form of skill acquisition.  Training received involved updating the skills and upgrading the technology and processes of agro-processing enterprises.  It was in a form of demonstration of usage and utilization of modern processing equipment and current processing methods for the production of high quality products.

Relevant institutions include Government Ministries and International Donor Agencies.  Skill acquisition is one of the strategies in Human Resource Development which is essential for MSMEs activities.  In line with UNDP/SMEDAN National Policy on MSMEs (2006), the establishment of special non-formal education, training courses and programmes for MSMEs owners managers and workers as well as incorporation of entrepreneurial and business skill in the curriculum of tertiary institution are strategies for empowering MSME operators.

Forty percent (40%) of those who got assistance received loans and grants for enterprise development.  Institutions involved are formal and non formal financial institutions, Government Ministries and Parastatals, NGOs and International Donor Agencies.  However, processors had very limited access to Bank credit and support from other sectors was equally inadequate.  Therefore, financial problems constrain the development and performance of MSMEs.  In agreement with this knowledge, National Policy on MSMEs (2006) reiterated Government’s commitment to eliminating the financing constraints to MSMEs development through the enunciation of the Micro Finance Policy for Nigeria, under the auspices of the Central Bank of Nigeria to generate maximum benefits to MSMEs.  Government should take adequate measures to enhance state resources for MSMEs financing as well as provide tacit encouragement and support to private sector and social/non – profit organisations to supply innovative and diverse financial services.

Ministry of Land, Survey and Housing assisted few processors in land titling and issuance of certificate of occupancy although after a prolonged period in the urban centres.  In the rural areas, community based institutions are responsible for leasing of land.  Delays in release of land due to communal ownership of land affected the use of land for enterprise development.  Land dispute inherent in communal ownership discourage effective utilization of land, which in most cases were resolved by Customary Courts or through Alternative Dispute Resolution System.  Twelve percent (12%) of those that got assistance had access to acquisition/allocation of Business Land Space.  Among the factors militating the growth and competitiveness of MSMEs in Nigeria is harsh business environment in terms of cost/ease of doing business and access to productive resources like physical space (land).  Generally, business environment in Nigeria is rated to be poorly competitive, based on international benchmarks.  World Economic Forum’s Global Competitiveness Report (2005) ranked Nigeria 79th and 88th out of 117 countries on the quality of the national environment and growth competitiveness indices respectively.  Nigeria ranks 94th out of 152 countries on the World Bank’s Ease of Doing Business.

Table 16 indicates that 4% of the processors had access to processing equipment through Government Ministries and International Donor Agencies (UNIDO) etc.  Ministry of Science and Technology in collaboration with National Centre for Agricultural Mechanization (NCAM) assisted the Entrepreneurs in the procurement of processing equipment manufactured by locally trained fabricators.  United Nations Industrial Development Organisation (UNIDO) supported activities of complementary public technology promoting institutions like Technology Incubation Centre (TIC), Industrial Training Fund (ITF) etc for the production of prototypes and local fabrication of equipment for more efficient production by MSMEs.  They trained artisans for equipment repairs and maintenance.  Assistance in terms of equipment mechanization was minimal and poor.  Concerted effort should be made by government to encourage local fabrication of equipment.  Generally poor local processing capacity has been identified as one of the major factors responsible for the failure of local small and medium enterprises to substantially benefit from the African Growth and Opportunity Act (AGOA), (UNDP/SMEDAN National Policy on MSMEs 2006).

Consequently, UNDP/SMEDAN National Policy on MSMEs (2006) advocated that Nigeria should improve their technology base like other developing countries by investing substantially in the development of technology parks, technology incubators and enhancing product quality that can compete favourably in the global market.

5.2.0       Result of Regression Analysis on the effect or influence of some socio-economic attributes (characteristics) of the agro-processing entrepreneurs on enterprise development:
Multiple regression analysis was undertaken to analyse objective two and to determine the influence of some socio-economic characteristics of agro-processing entrepreneurs on enterprise development.  In all, two regressions based on three functional forms were run.

5.2.1       Influence of some Socio-Economic attributes of Agro-Processing Entrepreneurs on the amount of credit obtained from both Formal and Non Formal Credit Institutions:
The three functional forms were applied but the double logarithmic functional form was chosen because it had the highest coefficient of determination R2 of 76.0%.  This percentage shows that the variables explained 76% of the variations in the amount of credit obtained by the entrepreneurs from financial institutions and is considered high.  The estimated function can be regarded as a good fit, for according to Nwoko (1989), as long as the R2 is up to 40%, the regression is a good fit at 90% confidence level or less.  The chosen functional form had the lowest error of estimates and invariably the highest number of significant variables. 

Regression Results:
Hypothesis (Ho1a) states that the socio-economic characteristics of the entrepreneurs do not significantly influence the financial resources (credit) obtained from financial institutions for enterprise development.   It should be noted that the F – value of 3.868 was statistically significant at 99% (0.008) level of confidence, thus indicating a strong influence of the independent variables associated with the amount of credit obtained from financial institutions.  To determine the impact of the independent variables on the amount of credit obtained by the entrepreneurs, t – values were computed from their corresponding coefficients and standard errors as is shown in table 33.

Years of schooling had regression coefficient of -.778 with standard error of .399.  It had a negative influence and was significant at 10%.  This means that the higher the number of years spent in school, the higher the possibility of acquiring credit from formal or informal credit institutions.  However, it had negative relationship or influence because those who were highly educated did not engage in micro/small agro-processing enterprises.  This confirms Adelaja (2004) who stated that cottage/small enterprises are more of proficiency than much school qualification.

Working Capital had a regression coefficient of .650 and standard error of .324, positive relationship and significant at 10%.  This shows that the more the working capital, the more credit could be extended to the enterprise.  It will be noted that majority of the processors 53% had between N10,000 – N50,000 as their working capital which was inadequate for efficient processing (table 11).  This agrees with the finding of Olorunshola (2001) who stated that working capital of many MSMEs are grossly inadequate because many are restricted to funds from family members and friend.

Value of Enterprise excluding Land had a regression coefficient of .989 and a standard error of .424.  It was positive and significant at 5%.

5.2.2       Influence of some socio-economic attributes of agro-processing entrepreneurs on the level of Assistance received from Government Agencies and Non Governmental Organisations (NGOs):
In the second regression, the dependent variable was level of Assistance received from Government Agencies and Non Governmental Organisations (NGOs) while the independent variables remained the same as in the first regression in table 33.  None of the functional forms proved a good fit.  The linear function which was considered better than the other two forms had a coefficient of determination of R2 of 13% with F – test value of .520 and non significant value of .901.  All the variables were not significant.  Consequently a stepwise regression (selection) method was adopted.  Results in table 34 gave a coefficient of determination (R2) of 86%.

Regression Results
Hypothesis (Ho1b) states that the socio-economic attributes (characteristics) of the entrepreneurs do not significantly influence the level of Assistance from Government Agencies and Non Governmental Organisations (NGOs) for enterprise development.  F – value of 84.739 which was significant at 99% level of confidence thus indicating a strong influence of the independent variables on the level of assistance from Government Agencies and Non Governmental Organisations (NGOs).


The following variables were significant:
Gender of Entrepreneur had a regression coefficient of -.191 and standard error of .087 with negative influence but significant at 5%.  It has been acknowledged that women play important role in Agriculture and economic development of the nation.  Osuala (1991) stated that processing and storage of Oil Palm Fruit and Cassava in Eastern States of Nigeria are done mainly by women.  However, they were usually disadvantaged due to low level of education and poor financial status.  There is a significant difference between the genders in terms of educational status as is shown in table 38.

Working Capital was significant at 1% but had negative influence.  It implies that to get assistance, the working capital should be reasonable to confirm that the business would break even and make profit.  It had negative influence because majority had very low working capital between N10,000 – N50,000 as recorded in Table 11.  Counterpart fund as a requirement for assistance was a problem for those who needed assistance from Government Agencies and Non Governmental Organisations.  The Roots and Tuber Expansion Project (RTEP) sponsored by State, Federal Government and International Fund for Agricultural Development (IFAD) requires a counterpart contribution of 20% from cooperatives to promote downstream activities of root and tuber including processing for value-addition, diversification and marketing (Ingawa 2001).

Number of Workers had positive influence and significant at 5%.  This implies that the higher the number of workers the more assistance the enterprise would get.  Government and Non-Governmental Organisations place much emphasis on Cooperative Societies.  People are easily assisted or reached when they form cooperative societies than when they operate as individuals.  This is in line with Ingawa (2001) who indicated that many farmers had been assisted in the National Fadama Development Project through formation of cooperative groups.

Value of Enterprise was significant at 1% and had positive influence.  This means that the higher the value of enterprise, the higher the assistance.  Ebonyi State Community – Based Poverty Reduction Agency (EB-CPRA) (2005), indicated that community contribution must be at least 10% of estimated cost, while her contribution becomes 90%.  This therefore implies that the higher the cost, the higher the assistance that will be given to the community or cooperative.

The other variables were not significant for getting assistance from Government Agencies and Non Governmental Organisations (NGOs).

5.2.3       Result of Inter-Correlation Analysis:
The inter-correlation matrix analysis was computed to establish how the selected socio-economic characteristics of the processors are inter-related with one another.  The results are presented in tables I and II in the Appendix.  In the first result, the correlation between Age of Entrepreneur and Length of years in processing was .761 (76%).  According to Olayemi and Olayide (1981) any inter-correlation value of less than 0.5 can be considered as a strong evidence of independence between the two variables; while any inter-correlation of 0.68 and above is a strong evidence of the high correlation (multi-collinearity) between the two variables.  The correlation coefficient of .761 (76%) could be explained because there is a relationship between the length of years one has spent in a business (experience) and the age of the enterprise owner.  Experience would normally reflect on the age of the person.  The Durbin – Watson (DW) value of 1.309 shows that there is no autocorrelation in the function.

In the second result, working capital of Enterprise and value of Enterprise excluding land had .865 (86%).  This is understandable because the working capital reflects on the value of the enterprise.  If the working capital is low, it implies that the value of the enterprise is equally low and vice versa.

Age of Equipment and Length of Years in business had .702 (70%).  The two variables are interrelated because the more the years in business, the higher the age of equipment.

5.3.0       Influence of Institutions on establishment and Development of Processing Enterprises:
In Table 35, 48% of the respondents agreed that their roads were accessible throughout the year while 37% said that their roads would not be assessed during the rainy seasons.  However, 15% indicated that they had no motorable road.  This obviously influences negatively on the economic and social development of such communities.  Fifty percent (50%) said that their water supply was steady throughout the year.  Twenty-three percent (23%) said that their water supply was not regular while 27% agreed that they had no access to potable water supply.  Only 3% had available and functional electricity supply.  Fifty-eight percent (58%) had no electricity in their communities at all.  In the area of healthcare delivery, 32% reported that their healthcare facilities were not functional while 16% said that such facilities were not available to them at all.  Due to the free basic education programme of government 93% and 67% reported that they have primary and secondary schools respectively.

Ninety-five percent (95%) and 53% did not have access to Telephone Services and Banks in their localities respectively.  Sixty-one percent (61%) agreed that they had functional Informal Credit Organisations while 33% did not have cooperative societies.  Seventy percent (70%) reported that they had access to raw materials for processing while 36% had enough market for the sale of their products.  Seventeen percent (17%) agreed that they have mechanized processing equipment while 15% had Equipment/Tools repairers (mechanics).  Fifty-three percent (53%) agreed that they had easy access to available land for their processing enterprise.  As can be observed, many facilities that were available were not functional.

Table 36 shows that some processors provided for their own electricity, water supply, waste disposal and security with varying amounts on monthly basis.  The expenditure on the provision of these services resulted to low saving which led to low investment or expansion of their enterprises.  This is in line with Okoro (2004) who stated that inadequate provision of essential services such as access to roads, electricity, water supply by Government constitute some of the greatest challenges to MSMEs operators.  World Bank Regional Programme on Enterprise Development (RPED) 2001 and UNIDO Nigerian Manufacturing Enterprise Survey (2001 & 2004) identified inadequate infrastructure as the main obstacle to business in Nigeria, particularly poor quality and unreliability of electricity, water supply, poor roads and ports facilities.  The infrastructural bottlenecks increase the cost of doing business and reduce cost – competitiveness of Nigeria MSMEs.  Some estimates from surveys indicate that virtually all firms rely on private generators – own provisioning of electricity, which greatly adds to energy costs.  A World Bank Survey (1989) according to Udechukwu (2003) estimated that such costs accounted for 15 – 20% of the cost of establishing a manufacturing enterprise in Nigeria.  Contemporary evidence has shown that the relative burden of the compensatory provision of infrastructural facilities is much heavier on MSMEs than on large enterprises (William, 2004).

In Table 37, a Likert Scale Analysis of the availability and influence of Amenities/Infrastructure on the establishment and development of micro/small agro-processing enterprises shows that Banking Institutions and Electricity Supply have little or no influence because their mean values of 2.23 and 2.09 respectively, are below the cut-off mark of 3.00.  Other amenities/infrastructure had much influence.  This agrees with Olorunshola (2001) who noted that banking sector tends to be lukewarm in meeting the credit requirement of the MSMEs.  This is because of inadequate prepared project proposals, incomplete financial documentation and inadequate collateral.  The banks also regard many MSMEs as high risk ventures due to absence of succession plan in the event of the death of the proprietor.  As a result, working capital is still a major constraint as most MSMEs are restricted to funds from family members and friends.  In table 6, 58% started their business with their own capital, 19% and 8% got money from relations/friends and cooperative societies respectively while 5% sourced fund from banks.

In Table 35, 58% had no access to Electricity.  Out of those who had access, only 3% agreed that it was functional.  Electricity supply is below acceptable level of performance in Nigeria and this has very little influence on the establishment and development of MSMEs.  Williams (2004) reported that several surveys on Business and Investment climate in Nigeria conducted by World Bank, UNIDO, Common Wealth Business Council (CBC) and World Business Environment Survey identified inadequate infrastructure particularly Electricity as the main business constraint in Nigeria.  Access to credit was identified as being the second most important constraint.


5.4.0       Gender Issues that influence Institutional involvement in the Development of Agro-Allied Processing Enterprises.

5.4.1       Cross – tabulation between male and female entrepreneurs with chi-square output results indicate that:
Educational Status:
In Table 38, there is a significant difference between male and female processors in their educational status.  Generally, the entrepreneurs had low educational status.  Majority 31% of them had primary school education.  Anderson (1982) noted that many MSMEs lack relevant educational and technical background and thorough business exposure, which constrain their ability to seize business opportunities that lead to growth and expansion.  Female entrepreneurs are most disadvantaged because they are mainly illiterates and are averse to new practices to the detriment of growth and survival of their enterprises.  Eboh and Ogbazi (1990) stated that the problem of high rate of illiteracy among the rural women deny them the opportunity of enhancing their productive potential thus causing them to be less innovative than their male counterparts.

Credit (Loan) Acquisition:
In Table 38, the result indicates that there is no significant difference between the male and female processors in their loan or credit acquisition.  Both the male and female entrepreneurs were grossly deficient of fund.  This is in conformity with Olurunshola (2001) who stated that working capital is a major constraint to MSMEs due to lack of fund from financial credit institutions.

Source of Loan:
There is a significant difference on the source of loan and gender of enterprise owner.  As can be observed, male entrepreneurs got loan more from formal credit sources than their female counterparts.  This is attributed to their relatively higher level of education than the female entrepreneurs.  Ekejiuba (1991) noted that women face difficulty in obtaining credit from formal sources.  This fact is aggravated by the fact that there is gender bias in providing credit assistant to female farmers (Eboh and Ogbazi 1990, Ijere 1991).  Due to the above reasons, rural women patronize more of the non-formal credit organisations than the formal credit institutions.

Membership of Functional Cooperatives and Processing Association:
There is no significant difference between the male and female processors in their membership to functional cooperatives, but there is significant difference between them in their membership of processing associations.  This should be expected because the male are relatively more educated.  Consequently they are most likely to belong to processing associations.  Cooperative groups are formed with people of the same interest and objectives.  So they have Age Grade groups, Town Union Organisations, Church groups, Social Clubs etc.  There was no restriction on level of education or proficiency in cooperative groups.  Both male and female processors joined groups of their interest irrespective of their educational status.  Therefore there was no remarkable difference between the male and female processors as members of cooperative societies.

Acquisition of Land:
In Table 38, there is a significant difference between male and female processors in relation to access land acquisition.  Female processors had more difficulty in acquiring land than their male counterpart.  Eboh and Ogbazi (1990) noted that rural women by virtue of cultural belief do not hold legal rights to farm land, and since the allocation of productive resources such as fertilizer, credit etc are generally linked to access to farm land, women are denied direct access to these resources.  This affects negatively their economic endeavour in Agriculture and Agro-allied enterprises.

Availability of enough Raw Materials:
Chi-Square Test in Table 38 indicates that there is a significant difference between the male and female processors in their access to raw materials.  The male processors had more access to raw materials than their female counterparts because of higher economic status which enabled them to cultivate more land for their raw materials and also purchase from other sources.  Women were disadvantaged due to high cost of land which further restricts them from affording more land for cultivation.  This causes great hindrance to availability of raw materials for processing.  Due to their low economic status, they could not equally purchase raw materials from other sources.

Mechanization of Equipment:
Table 38 indicates that there is a significant difference in the possession of mechanized equipment between the male and female processors.  Male processors had more mechanized equipment than their female counterparts.  Female processors claimed that mechanized equipment were not female friendly, therefore complicated and laborious to operate.  Also due to high cost of mechanized equipment, many female processors were not able to have possession of them.  Osuala (1991) affirmed that women are very much involved in food processing through with simple crude – technology with minimal mechanical aids which leads to drudgery.

Adequacy of Processing Equipment:
Table 38 shows that there is no significant difference between the male and female processors in relation to having adequate equipment for processing.  This implies that both the male and female processors did not have adequate equipment.  This is in agreement with Makinwa (1996) who noted that the major problem that impairs the growth of MSMEs in Nigeria has been the inability to get reliable processing machines.


Availability of Market for Product disposal:
Table 38 indicates that there is no significant difference in the availability of access to market for product disposal among the male and female entrepreneurs.  They had equal opportunity of disposing their products in the same market.  For the development of micro/small enterprises, there is need for adequate market information about the purchase of input and sale of output.  There is equally need for networking with trade groups and opening access to various markets through Business Support Centres (BSCs).  Jamodu (2004) stated that expansion of standardization and quality control programmes to cover micro/small enterprises with a view to making them competitive in the globalised world economy should be intensified.

Access to Training:
Table 38 indicates that there is no significant difference between the gender in relation to access to training.  Generally, majority of the processors did not receive any training relating to their enterprise.  Forty-nine percent (49%) and 53% of the male and female processors respectively did not receive any training while on the job.

Access to Ownership of Bank Account:
Table 38 shows that there is a significant difference between male and female processors in their access to ownership of bank account.  The male were relatively more educated and more financially stable than the female processors.  Consequently, they were able to have accounts with some banks.  This is in conformity with Eboh and Ogbazi (1990) who noted that the problem of high rate of illiteracy among the rural women deny them the opportunity of enhancing their productive potential.

Application to Bank for Credit:
In table 38, Chi square result shows that there is no significant difference between the male and female who applied for loan in the bank.  Both male and female had the same problem of credit acquisition because both operated micro/small enterprises.  They claimed that Bank officials were indifferent towards them as regards to credit acquisition.  This is in agreement with Olorunshola (2001) who noted that banking sector tends to be lukewarm in meeting the credit requirement of the MSMEs.

Registration of Enterprise:
Chi square result in Table 38 shows that there is a significant difference between the male and female processors in the registration of their enterprises.  This should be expected because the male processors were more educated and had more money than the women.  Many complained that registration of their enterprise was too complicated and too expensive considering the small nature of their businesses.


5.4.2       Problems of Female Agro-Processors and Suggestions for Improvement:
In Table 38, cross – tabulation results between the gender of enterprise owner and access to institutional facilities show that female processors did not have enough access to some institutional facilities.  Consequently, they enumerated their problems such as insufficient or/and lack of fund, non availability of mechanized equipment, high cost of labour, lack of favourable market for product, illiteracy/lack of training, non availability of acceptable collateral for loan.  They equally said that absence of female friendly equipment and their commitment to housework or family duties retard business progress.  All these problems seem to render female processors more vulnerable and poorer than their male counterparts.  This is in line with Okonja, (1991) who noted that women are poorer than men due to lack of access to basic education, credit facilities, land and agricultural technologies among others.

Female processors therefore proffered some solutions to their plight, which include provision of micro-credit with favourable conditions, female friendly mechanized equipment, adequate training and skill acquisition, easy access to land, availability of improved transport service and favourable market etc.

According to Women Entrepreneurs in SMEs (2001), much evidence indicates that women are very good credit risks, with many small-scale credit projects for women reporting very high repayment rates in a range of sectors and activities.  They therefore reported that there are key criteria for micro/small enterprise development schemes, aimed at poor rural women, which can both improve demand for credit and reduce the risks of indebtedness.  These are modest financial investment, low investment risk, short gestation period between investment and generation of regular income and availability of markets.  Targeting women as clients of micro credit programmes has been a very effective method of ensuring that benefits of increased income accrue to the general welfare of the family.  The Grameen Bank of Bangladesh is a case in point, where about 95% of the borrowers were poor rural women, resulting in the improvement of the socio-economic potential of the beneficiaries (Jacob 1995).

5.5.0       Effects or influence of Institutional performance on Agro-Processing Enterprise Development and Poverty Reduction:

5.5.1       Causes of low Performance:
In Table 40, 88 respondents representing 33% affirmed that they had low performance in their business and attributed one of their major problems as low capital outlay with 22%.  Other reasons for low performance included high cost of raw materials, competition arising from modern products, lack of skill for new processing methods.  Others included low demand for product, general poor infrastructure and malfunctioning of Amenities.

This is in agreement with Olorunshola (2001) who noted that banking sector tends to be lukewarm in meeting the credit requirement of MSMEs, Adebusuyi (1997) who observed that insufficient demand for the products of MSMEs imposes constraints on their growth.  Uduebo (1985) affirmed that incidences of multiplicity of taxes and regulatory agencies have always resulted in high cost of doing business.  Also Makinwa (1996) said that lack of technical know-how and experience in relevant technology and lack of access to appropriate equipment are fundamental problems that impair the growth of MSMEs in Nigeria.  Onokahoraye (1995) stated that market and marketing are underdeveloped and there is a general lack of purchasing power among the majority of the population.  He asserted that processors face problems in procurement and storage of raw materials as well as distribution and marketing of finished products.  Another problem is obtaining information on markets for both raw material and finished products in terms of volume, prices and location.  Government should therefore assist MSMEs operators to locate foreign markets and attend both national and international exhibitions to improve their products.

5.5.2       Description of Business Growth and Factors Influencing Growth of Agro-Processing Business:
In table 41, entrepreneurs agreed that some factors have influenced the growth of their business which included; High demand for product, easy access to output and input market, cheap labour, improved technology, easy access to cheap capital, low input cost and improved extension services.

This confirms Government’s commitment in implementing programmes towards self-reliance and self-sufficiency in Nigeria (Aliyu, 1998).  Among some of these programmes is the Root and Tuber Expansion Programme (RTEP) which was designed to address post harvest losses, inappropriate processing technologies and lack of product utilization and marketing opportunities etc of Root and Tuber Crops.  RTEP second Triterm Preparatory Plan (2007) indicated that there has been a sustainable increase in value addition to RTEP mandate crops, thereby contributing to rural agro-industrial and entrepreneurship development and livelihood improvement.

One of the manifestation of evidence of growth, was injection of more capital (fund) into the business which accounted for 40%, others included acquisition of improved equipment and hiring of more labourers etc.  According to Bello (2001), Federal Government has approved the sum of N5 Billion Naira for the implementation of the special programme on Food Security over a period of five years.  Uduma (2005), stated that loan was extended to Ebonyi Farmers and Processors under the National Poverty Eradication Programme (NAPEP).  All these programmes are livelihood – enhancing interventions for enterprise improvement and poverty alleviation.



5.5.3       Effect of Enhanced Income and Agro-Processing on Business, Family, Neighbourhood and Self Esteem of Entrepreneurs:
Table 42 shows the uses of money got from enhanced income of the Entrepreneurs.  Nineteen percent (19%) acknowledged that it positively affected their feeding, while 18% used it for their children’s school fees.  Fifteen percent (15%) said that they paid their hospital bills with ease.  The least they could achieve was to save money in the bank and build or renovate house(s) with 3% and 2% respectively.

Improved business had multiplier effect on the lives of people in the environment.  On table 42, 31% of the processors impacted on the neighbourhood by the sale of their product to the public, 24% created employment while 22% purchased petrol/diesel/engine oil from sellers.  Other positive effects on the community include patronage of spare part dealers and equipment repairers with 5% respectively.  In all, there was business linkages and synergy leading to general rural business growth and development.

Due to improved income from processing, 32% of the entrepreneurs helped the less privileged in the society, 28% contributed to community development, 25% were better off than before the commencement of their processing enterprises.  Nine percent (9%) mainly female entrepreneurs participated in decision making in their families while 2% was active in politics.  This agrees with the vision of UNDP/SMEDAN National Policy on MSMEs (2006) as a sector that delivers optimal benefits of sustainable growth, employment generation, wealth creation, poverty reduction as well as creation of linkages for focussed integrated development in the domestic economy while maintaining international competitiveness.

5.5.4       Beneficiary Impact Assessment of Enterprises:
Impact assessment of enterprises on Agro-processing business development and quality of life of processors was done to evaluate the level of significance of the enterprises and the one with the most impact.  Data on table 43 shows that there is no significant difference in the impact between Cassava processing and Rice processing on the family and business with a non significant value of .452.  However, it is observed that there is a significant difference on the impact between Cassava processing and Oil Palm Fruit processing; Rice processing and Oil Palm Fruit at 1% respectively.  Further investigation shows that Rice processing had the highest impact with a mean of 3.75 as against 3.39 and 2.35 for Cassava and Oil Palm Fruit processing respectively.  This is in agreement with the result on table 29, where the mean monthly revenue of Rice processors was N45,634 as against N30,110 and N23,900 for Cassava and Oil Palm Fruit processors respectively.

Impact assessment of the enterprises on people living in the community shows on table 44 that there is a significant impact on the neighbourhood.  Comparisons of the three enterprises indicate that there is no significant difference in the impact between Cassava processing and Rice processing on the people.  There is a significant difference on the impact between Cassava processing and Oil Palm Fruit processing.  On the whole, Rice processing had the highest impact with a mean of 2.55 followed by Cassava processing with 2.50.  Oil Palm Fruit processing had the least mean of 1.88 with the least impact on the people in the neighbourhood.

In assessing the effect of Agro-processing business on the self-esteem of the entrepreneurs, table 45 shows that there was no significant difference on the impact of the enterprises on their self-esteem.  It implies that the level of processing in the three enterprises was not adequate and sufficient to impact reasonably on the self image of the processors.  They were all micro processors whose meagre income did not give enough impetus on their self esteem.  It therefore shows that the level of their contribution was minimal compared with what other people in the society achieved.  It is however relatively insignificant and did not boost their self worth.

It should be acknowledged that politicians are highly recognised in the society and only 2% of the processors were active in political activities.  Their contributions were very negligible and unnoticed.  In line with Sancho (1996) the poor are unable to meet social and economic obligations, have few, if any economic assets and sometimes lack self-esteem.

5.5.5       Respondent’s Perception of Relationship between access to Institutional facilities and implication on Poverty Reduction:
Hypothesis III:  There is no significant relationship between access to institutional facilities and poverty reduction.

The opinions of agro-processors were analysed to determine how the provision of institutional amenities could improve enterprise development which could aid poverty reduction.  Data on table 46 shows that 99% of the processors agreed that creation of friendly access to credit and improvement of quality of infrastructure respectively could greatly reduce poverty.  Improvement on safety and security scored 98%.  Reduction of tax scored 77% and was the least issue considered to have implication on poverty reduction.  A chi-square result shows that all the institutional facilities in table 46 are highly significant at 1% level (0.000).  This implies that there is a significant relationship between all the institutional facilities listed in table 46 and poverty reduction.  The Null hypothesis was rejected and the alternative accepted.  To determine the degree of acceptance, a five-point Likert Scale Analysis was done with a mean of 3.0 as cut-off mark as shown in table 47.

Creation of friendly access to credit had the first position with 4.9.  In line with Anyanwu (2003) who stated that finance is obviously not the only problem militating against the development of micro/small and medium enterprises, it is certainly the most formidable.

Improvement on safety and security ranked second with 4.38.  It is important to note that no meaningful economic activity can thrive in a war torn or unsecured environment.  Williams (2004) stated that several surveys on business and investment climate in Nigeria conducted by World Bank, United Nations Industrial Development Organisation (UNIDO) and Commonwealth Business Council (CBC) indicated that firms were particularly concerned about uncertainty (political instability, general uncertainty, crimes).  Improvement in public transport service and quality of infrastructure with 4.32 and 4.26 respectively were third and fourth on the list.  DFID (2004) stated that inadequate infrastructure was identified as one of the main business constraints in Nigeria.

Provision of vocational training opportunity and improvement in attitudes of local officials came fifth and sixth position on the list.  Provision of permanent market stores and improvement in the performance of NDE, NAPEP etc took the seventh position.  Creation of Industrial Estate for Small Scale Entrepreneurs and Reduction of Taxes were eighth and ninth in the list.

It therefore becomes imperative that there be improvement in the facilities in order to reduce poverty.  Creation of enabling and conducive Business environment reduces to a very great extent the cost of production, invariably increasing investment and savings.

5.6.0       Identification of factors that are constraints to the performance of processing enterprises:
Six factors were identified as hindrances to micro/small agro-processing enterprise development.

Factor one is “Inappropriate and High Cost of Equipment Issue”, which in Table 48 had the following variables with their regression weights as follows:  Inappropriateness of Equipment to available infrastructure (.809), Inappropriateness of Equipment to Production Need (.742), Inappropriateness of Equipment to Workers’ Skill Level (.736) and High Cost of Equipment (.577).  “Inappropriate and High Cost of Equipment” was one of the limiting factors for enterprise development.  The processors complained about processing equipment not suitable to the infrastructure available in their localities.  Many communities had no supply of Electricity.  For those who have electricity, its supply was grossly inadequate and irregular for sustained processing.  Many processors were still using obsolete or out-dated equipment.  The reason they gave for not using mechanized equipment was that they had no knowledge of such equipment.  Those who were aware said that they lacked enough money to buy modern equipment.  Some of the mechanized equipment require special skill, which was lacking among the processors and many were not female friendly.  Female processors had no option than to hire the services of male operators which were difficult to find.  Some of these equipment were labour displacing while others were high labour involving.

Cost of equipment was exorbitant for the resource – poor processors to acquire.  Maintenance of these equipment was equally a problem because majority of the processors depended on equipment repairers from the urban centres.  This usually took sometime and invariably, impaired seriously on the progress of the business.  The above mentioned factor constitutes inhibitions to the establishment and development of micro/small agro-processing and is in line with Makinwa (1996) who noted that the major problem that impairs the growth of MSMEs in Nigeria has been the inability to get reliable processing machines, lack of technical know-how and experience in relevant technology.  Lack of access to appropriate equipment is also a fundamental problem.  Prevalence of obsolete equipment leads to poor product quality.  Imported equipment is often inappropriate to local use and the issue of supply of spare parts and maintenance becomes a hindrance.

Factor two of the constraints to the performance of the processors was “Sustainability and Business Environment Issue”.  Variables that make up the factor are:  High cost of getting justice (.889), Long time of getting justice (.853), Non availability of training-skill acquisition (.772), Lack of labour (.692), Scarcity of raw material (.585) and Tenure insecurity (.524).

Justice and fair-play are among the essential requirements for rapid development in any community.  Processors complained that it was very costly to get justice and that it took a long time before a case was concluded.  There were usually land cases or other cases related to their business.  They normally used law courts, alternative dispute resolution methods, traditional courts and trade unions/business associations to resolve disputes.  Assessment of security situation of business environment performance of public security services in the maintenance of law and order, and assessment of Police – Public relations in the past few years were rated low by the entrepreneur.

Non availability of training (skill acquisition), lack of labour and high cost of labour were among the complaints of the processors.  Most of the processors could not get trained or acquire sufficient skill due to their low level of education.  It was difficult to adopt and adapt to the modern technology as a result of complexity of these equipment.  Consequently, there was lack of labour and very expensive when it was available.  Unskilled labour was equally hard to get because of rural – urban migration.  The youths preferred doing menial jobs in the towns to staying in the villages and many of the micro/small processing enterprises were situated in the rural areas.

Scarcity of raw materials was one of the constraints in processing.  Some sourced input from their farms while some purchased from others.  Majority combined the two methods for their input supply.  Processors however complained of high cost of input, irregularity of supply during planting season, poor quality of input and inadequate supply of input.  These were problems encountered by the processors and it affected steady or uninterrupted processing activities.

Tenure insecurity was also a problem to the processors.  Some owned the land they were using for farming and processing.  Others were either on lease or on rent.  Those who acquired land complained that the cost was exorbitant due to high demand of land by many people.  Other difficulties encountered were delays in processing documents and in the release of land due to communal ownership.  Land owners were equally reluctant to lease or rent their land due to perceived negative externalities, which could be in form of effluence, noise and other forms of pollution resulting from processing.  Some processors’ tenancy were revoked because of these negative externalities.

These variables are limitations to effective performance of the processing enterprises.  Udechukwu (2003) suggested that in a developing country like Nigeria, it becomes imperative to provide the required enabling environment for the development of MSMEs so that they could adequately play the role expected of them in economic transformation and poverty reduction.  This could be made possible through a responsive industrial policy and government’s overall economic development strategies that will ensure the collaboration of all development partners and the effective coordination and utilization of economic resources.

“Socio – Infrastructural Issue” is the third factor which comprised of variables that had to do with physical infrastructure and social amenities.  Variables which had a high loading in this factor included High cost of Infrastructure (.714), Poor Availability of Infrastructure (.712), Poor Healthcare Delivery (.701) and High cost of Public Transport (.688).

Processors complained of poor availability of infrastructure.  Many communities do not have motorable roads and some roads are not usable during the rainy seasons.  Due to bad road network, cost of public transport is high.  For processors who own vehicles, cost of maintenance becomes alarming as a result of wear and tear experienced from bad roads.

Processors affirmed that water supply for processing was inadequate.  Sources of water supply were from pipe borne water, borehole, stream/pond, rain water and water tankers.  Pipe borne water and boreholes were scarcely located in the rural areas.  They easily broke down due to excessive pressure wherever they existed and without prompt repairs.  Water source from streams and ponds was mostly available during rainy season and dry up when the rains are gone.  Water supply from rain water is only for immediate consumption because many processors do not harvest rain water for use during period of scarcity.  They complained of high cost of constructing water harvesting facility.  Purchase of water from vendors is quite expensive considering the volume of water needed for processing.  Some processors resort to digging well, which is equally costly to embark on in view of their low financial status.  Electricity is non existent in many communities.  Processors who use electric driven equipment rely mostly on generators if they could maintain it.  On the other hand, they continue with the use of manual and obsolete equipment.

There are no hospitals and clinics in many rural areas.  Rural dwellers travel a long distance before been attended to in hospitals.  Qualified medical personnel posted to Government hospitals abandon their duty posts in the villages due to unconducive environment.  Private clinic which exist are very expensive for the rural dwellers.  The rural populace therefore resort to the services of Quacks with attendant complications and death in some cases.  According to the adage that “Health is Wealth”, many of these processors are unproductive because of lack of proper medical attention.

Due to poor state of physical infrastructure and social amenities in the state, the rate of development of micro/small agro-processing enterprise is slow.  It affirms the opinion of Okoro (2004) who noted that inadequate and inefficient infrastructural facilities pose serious problem to MSME’s development in Nigeria.

“Economic/Financial Issue” is the fourth factor militating against the development and performance of micro/small agro-processing enterprises.  This comprises Lack of Fund (.816) and High cost of Credit (.501).

Inadequate or lack of fund is one of the major problems confronting processing activities.  The processors expressed their inability to purchase modern equipment due to lack of fund.  There are no banks in many communities, therefore they have never applied for loan.  For those who live in areas where banks exist, financial institutions are always reluctant to extend credit to them because they could not meet the necessary conditions for loan.  They generally do not have acceptable collateral.  Their lands are not always registered and well documented due to communal ownership of land in rural setting.  Non-formal credit organisations such as money lenders, cooperatives do not always have enough fund to lend.  Their interest rates are relatively high for the processors to cope with.

Female processors complained that they have limitations as women due to discrimination against them.  Women are not entitled to inherit land from either their fathers or husbands as a result of custom and tradition of the people.  They therefore find it difficult to expand their processing outfit because they do not have acceptable collateral for loan.  They lamented that to get a loan from money lenders, consent of their husbands must be given.  Many of them complained about this attitude as unjustifiable because some are not married (widows) while some are not in cordial relationship with their husband.  Consequently, they cannot get financial assistance on their own right as human beings.  In consonance with Olorunshola (2001), who agreed that access to finance is limited by high interest rate, short term maturities, heavy collateral requirement, inadequacies of land titles and weak judicial system.  Women are discriminated against as can be observed in their denial of inheritance to land and other economic privileges.  Women are directly precluded from obtaining credit because they do not control resources and therefore are unable to provide the necessary collateral.  Dauda et al (2000) noted that women are neglected because service delivery organisations generally focus on one individual in a household, the head who in the majority is a man and is assumed to represent the interest of the household members.

The fifth factor militating against the establishment and development of micro/small agro-processing enterprises is “Marketing Issue”.  The variables include Lack of Market Network/Information (.789), Competition (.729), Inadequate Business Space (.713) and Increasing cost of Rental (.686).  Due to lack of market information, middlemen often exploited the processors.  Many could not travel out of their communities to sell their products for better prices due to high transport cost.  Competition from other processors resulted to declining sales and glut in many cases.  Equally, competition from importation of same product (e.g. Foreign Rice) brought down the prices of the local ones.  Low quality of products did not allow for healthy competition with foreign products, as such it was difficult to meet customers demand.  Due to low quality and non standardization of these products, they were not packaged for international market.  Lack of storage facilities was also a problem.  Processors complained of inadequate business space and increasing cost of rent.  The processors were therefore not satisfied with the prices they got for their products as a result of lack of market network.  Adebusuyi (1997), observed that insufficient demand for the product of MSMEs imposes constraints on their growth.  The non standardization of their products, the problem of quality assurance as well as generally low purchasing power arising from consumers dwindling real incomes, effectively restrict their market.

This is compounded by the absence of knowledge about the existence of fringe markets by MSMEs.  Onokahoraye (1995) stated that market and marketing are underdeveloped and there is a general lack of purchasing power among the majority of the population.  He asserted that processors face problems in procurement and storage of raw materials as well as distribution and marketing of finished products.  Another problem is obtaining reliable information, on markets for both raw materials and finished products in terms of volume, prices and location.  UNDP/SMEDAN National Policy on MSMEs (2006) equally stated that factors that hinder MSMEs competitiveness in markets include relatively high product cost structures, product quality and limited marketing resources.  The challenges centre on accessing market intelligence, competition from larger businesses and from imported products, with the problem of securing a greater proportion of government procurement.  Government therefore, should assist MSMEs’ operators to locate foreign markets and attend local, national and international exhibitions to improve the quality of their product.

The sixth factor that was considered as a hindrance to the development of micro/small agro-processing enterprise is “Government Policy Issue”.  The variables included Tax Collectors’ harassment/demand for gratification (.882), Too many taxes/high taxes (.860), Inconsistency of Government Policies (.697) and Non linkage to relevant bodies (.665).

The processors complained that they were harassed by government officials who demanded gratification.  This was in form of asking for proof of registration of enterprise.  Many did not register their businesses because they felt their enterprises were operated on a small scale and no body would find out that there were not registered.  Some were ignorant that they should register.  Others complained that it was complicated and too expensive to register.  This led to undue harassment from government officials.  The processors also complained of too many and high cost of taxes imposed on them by Government.  Among the taxes are local government tax, market tax, haulage tax, produce tax and income tax.  Uduebo (1985) affirmed that incidence of multiplicity of taxes and regulatory agencies has always resulted in high cost of doing business.  According to Eboh (2005), a survey conducted by Better Business Initiative (BBI) stated that small businesses shy away from formalising their operations not because they are afraid of tax payment or high cost of business registration but because of the huge burden of other levies that they are expected to pay particularly at sub-national levels (State, L.G.A).  The same survey found out that the overall system of tax administration in Nigeria tends to be largely arbitrary, not transparent and unfavourable to small business.

Inconsistency of Government policies and instability of Government affected the processors.  They said that Government seldom consulted them during the process of developing new policies which affected their businesses.  They also complained that Government rarely took into consideration their opinions about issues affecting them.  This means that government policies are Top-Down instead of Bottom – Up approach.  In realization of this factor, Ingawa (2001), stated that adoption of participatory and community – based approach to project implementation promotes commitment, ownership and makes stakeholders play active role in their own development.

Sule (1986) noted that poor implementation of policies, including administration of incentives and measures aimed at facilitating MSMEs’ growth and development have had unintended effects on the sub-sector.  This has resulted into confusion and uncertainty in business decision and planning as well as weakened the confidence by the MSMEs on Government capacity to faithfully execute its programme.  The processors noted that government was inconsistent in the execution of her policies.  Instability in Government reflected in constant changes in policy.  Inconsistent policies relating to sudden obliteration of agencies or projects, too often change of Chief Executives of Programmes and Ministries are adverse to the development of MSMEs in Nigeria.  Examples of some of these programmes include:  Operation Feed the Nation (OFN), Green Revolution, Better Life for Rural Women, Vision 2010, Family Support programme (FSP) and Family Economic Advancement Programme (FEAP), which were promoted by past governments as interventions for reducing poverty but had little effect due to non continuity of policies.

Many of the processors said that they were not linked to relevant bodies that would help in finding solutions to their financial, training and marketing needs.  Extension services were inadequate.  Some wished that they were linked to financial institutions, national and international markets, competent equipment fabricators and repairers for enterprise expansion and improvement.  This is in line with UNDP/SMEDAN National Policy on MSMEs (2006), which stated that MSMEs are being globally acknowledged as a potentially critical economic sector, which must take its bearing from the overarching NEEDS strategy and be based on Public – Private Partnership, Collaboration and Cooperation among stakeholders.  It advocates synergy with other MSME – affecting policies and programmes in other sectors to promote growth and sustainability.  MSMEs development must be focussed on supporting enterprises to move up to higher value added links in the value chains particularly for labour – intensive, low technology and resource – based enterprises.


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