Nigerian Journal of Agriculture, Food and Environment. 11(4):112-117 Published December, 2015 Okoror and Umeh, 2015 NJAFE VOL. 11 No. 4, 2015 112 EFFECT OF MICROCREDIT ON POVERTY LEVELS OF LAPO CASSAVA FARMERS, EDO STATE, NIGERIA Okoror, O. T. and Umeh, C. B. ABSTRACT Department of Agricultural Economics and Extension Services, Faculty of Agriculture, University of Benin, Benin City, Edo State, Nigeria. *Corresponding Author: okiemua.okoror@uniben.edu, tessyugboya@yahoo.com. +234(0)7051837462. Credit breaks the vicious cycle of poverty of small scale farmers, however, many of the rural cassava farmers are still poor. This study therefore analyzed the effect of microcredit on poverty alleviation among Lift Above Poverty Organization (LAPO) cassava farmers employing descriptive statistics, F.G.T poverty index and t-statistic. Simple random sampling technique was used to select 86 cassava farmers. Result showed that majority (67.4%) of cassava farmers that were beneficiaries of micro credit were males, 66.3% of the farmers had primary education, and majority (80.2%) were married. The FGT Poverty index measure showed that before access to credit, the poverty incidence, poverty depth, and poverty severity among the respondents were 22.0%, 10.6% and 8.3% respectively. However, after access to credit the farmers had poverty incidence (19%), poverty depth (3.7%) and poverty severity (2.4%). A test of significance showed significant difference in the mean income, savings and farm sizes of the respondents before and after access to credit. The study therefore recommends low interest rate on loans for easy access to credit by farmers in order to increase production. Keywords: Micro credit, Poverty, Cassava production, LAPO farmers, FGT Poverty measure. INTRODUCTION Agriculture was the main stay of the Nigerian people before the discovery and commercial exploration of crude oil in 1956. Varied crops were exported and severed as income to the nation, and much attention was given to agriculture in terms of financing it and providing raw materials to aid production. However, since the relegation of agriculture to the background, food insecurity level has increased as food production has been on the decline (Akinnifesi et al., 2007). The government and various agencies in an attempt to address the problem of declining food production which aggravates the poverty of the people set up various food and poverty eradication programmes over the years amongst which were National Accelerated Food Production Programme (NAFPP), Operation Feed the Nation (OFN), Family Economic Advancement Programme (FEAP), and National Poverty Eradication Programme (NAPEP). However, Nigeria is still faced with the problem of food insecurity and poverty. Tassie et al. (2012) attributed the food insecurity issues to lack of credit among other things. Micro credit has therefore been advocated as a measure to boost agricultural production and alleviate the poverty of the people as Odoemenem and Obinne (2010) reported that credit is important in boosting agricultural production and thereby increasing the income of its users. Nigerian agriculture inevitably requires some capital injection from formal and informal financial sectors of the economy if this viscous cycle of poverty is to be broken. Both formal and informal credit institutions exist in Nigeria. However, the formal credit institutions are not readily accessible to the rural poor due to the service structure which is usually too complex to the rural poor such as the bureaucracy involved, collateral requirement and the high interest rates. This spurred the emergence of the informal credit institutions to bridge the gap in service delivery to the rural poor as they make credit easily accessible to the rural poor to boost their production. Although the informal credit institutions are making positive efforts in meeting the credit needs of small scale agriculture in Nigeria, their limited resources restricts the extent to which it can effectively and sustainably satisfy the credit needs of these farmers. This is because as the small scale farmers increase in size, the volume of credit required becomes increasingly difficult for informal credit sources to satisfy (Aryeetey and Udrys 1995). Micro credit as defined by Ugoani and Onwubiko (2013) are financial services in the form of soft loans rendered to small scale businesses by financial institutions to boost their production. Nelson and Nelson (2010) refer to “Micro-credit as schemes that extend small, low interest loans to the rural poor for self employment, income generation and poverty alleviation”. LAPO Microfinance Bank Limited is a pro poor financial institution committed to the empowerment of low- income Nigerians through creation of access to responsive financial services on a sustainable basis and delivered in a cost effective and innovative manner. It was established in the year 1987 to assist clients break out of the grip of poverty. The inadequacy of LAPO to reach some targeted clients (farmers) led to the set up of LAPO Agricultural and Rural Development Initiative (LARDI) established in May 2007 to offer micro credit facilities to poor farmers who are mainly in the rural areas. With the support of LARDI, rural farmers are now investing increasingly in agriculture in which cassava is one of the crops they invest in.