Title page

Certification      i

Dedication      ii

Acknowledgement    iii-iv

Abstract     v

Table of Contents   vi-viii

List of Tables     ix


1.0 Introduction       1

1.1 Background of the Study       1-3

1.2 Problem Statement       3-5

1.3 Objectives of the Study       5

1.4 Justification of the Study       5-6

1.5 Plan of the Study       6


2.0 Theoretical Background and Literature Review       7 

2.1.Concepts of Savings    7-9

2.1.1. Factor Affecting Saving among Rural Agro-processing Households     9-10

2.1.2. Type of Saving        10

2.2. Concept of Investment      11-13

2.2.2.    Types of Investment   13-14

2.2.3. Factors Determining Investment   14-15

2.3. Household Savings   15-16

2.4. Rural Informal Savings   16-18

2.5. Savings Management in Developing Countries   18

2.6. Importance of Savings Mobilization   18-20

2.7. Rural Investment   20

2.7.1. Factors Affecting Rural Investment   20-21

2.7.2. Eliminating the Obstacles of Investment in Rural Areas   21-22

2.8. Benefits and Deterrents of Savings and Investment Among Agro-processing   22-24


2.9. Empirical Review   24-25


3.0. Research Methodology   26

3.1. Area of the Study   26

3.2. Data and Methods of Data Collection   26-27

3.3. Sampling Technique   27

3.4. Methods of Data Analysis   27

3.4.1. Socio-economic Characteristics of the Cassava Processors   27

3.4.2. Investment Pattern of the Cassava Processors   27

3.4.3. Income Level of the Cassava Processors   27

3.4.4. Determinants of the Saving Rate of the Cassava Processors    28

3.4.5. Determinants of Savings and Investment among the Cassava Processors   28-30


4.0. Resultsand Discussion    31

4.1. Socio-Economic Characteristics of the Cassava Processors   31-32

4.2 Saving Pattern of the Cassava Processors   32-33

4.3. Budgetary Analysis of Income Level of the Cassava Processors    33

4.3.1. Budgetary Analysis Results   33-34

4.4 The Determinants of the Savings Rate among Cassava Processors   34-35

4.5 The Determinants ofSavingsand Investmentin the Study Area    35

4.5.1 Determinants of Savings among the Cassava Processors    36

4.5.2 Determinants of Investment among the Cassava Processors    36


5.0 Summary, Conclusion and Recommendation    37

5.1 Summary    37

5.2. Conclusion   37-38

5.3 Recommendation   38


APPENDIX: Questionnaire   44


In Nigeria, agriculture has remained the largest sector of the economy. It generates employment for about 70% of the population and contributes about 40% to the Gross Domestic Product (GDP) with crop accounting for 80%, livestock 13%, forestry 3%, and fishery 4%. Agriculture accounts for over 70% of the non-oil export and provides over 80% of the food needs of the country (Adegboye,2004). Nigeria has a total land area of 98.3milion hectares, but at present, only about 34 million hectares or 48% are under cultivation. Agriculture in Nigeria is practiced at the subsistent level and is characterized by numerous farmers operating several scattered small and fragmented plots of land using traditional methods such as land rotation, bush burning with the use of crude implements like hoes and cutlasses.

According to Olawepo (2010), the majority of the rural populace in Nigeria either depends entirely on farming and farming activities for survival and generation of income, or depends on other non-farming activities to supplement their main source of income. Over 90% of the country’s local food production comes from small-scale farms. About 60% of the population earns their living from these small farms which are usually of the size of about 0.10-5.99 hectares (Olawepo,2010). It could then be seen that most farmers have limited resources, a factor that limits their productivity, income, savings and investment. In the midst of all these, farmers have resulted to a number of means to enhance their production and also to improve their well-being socio-economically. These options include pooling their resources and working together as members of cooperative societies, through the use of loan and other services from microfinance or community banks; making daily, weekly or monthly contributions through the formation of small savings and thrift groups like Ajo-dida and Esusu or employing the method of risk diversification by engaging in the trading of other non-agricultural goods or in processing or value addition of agricultural produce into finished goods with longer shelf-life as agro-processors – those into the process of producing or sourcing for agricultural produce and converting them into finished goods for consumption.

In Nigeria, where rural farmers account for over 80% of the farmers in the country and produce 95% of the domestic food production in the country (Olashore,1998; Yusuf,2000), the majority of rural households are small-scale farmers and as such, a significant part of their non-farm income comes from small and medium enterprises (SMEs). Rural entrepreneurs are characterized by poor access to credit, poor savings rate, risk and uncertainty, poor weather condition, focusing of information on technology and not on pricing. The inability of rural entrepreneurs to access credit has restricted their potential to expand their enterprises especially in diversifying into non-farm activities and end up with low income and hence, poor savings (Albu and Scott,2001). This has led to low standard of living and inability to break the vicious cycle of poverty for the rural dwellers.

Savings is normally considered in economics as disposable income minus personal consumption expenditure. It could also be regarded as income that is not consumed immediately by the purchase of goods and services. According to Azhar (1995), savings may be made in kinds such as jewelry, land, livestock, or dowry. It may still be in the form of currency notes deposited in banks or more often be hoarded. Savings are very imperative for supporting and developing rural industries. They provide several benefits for households. Directly, saving could be used for investment. Indirectly, saving indicates repayment ability, also increase credit rating and as collateral in the credit market (Brata,1999). Savings is both a risk management strategy and determinant of magnitude of investment but its determinants and mobilization strategy are controversial issues in the literature (Mkpado and Arene,2010). Ayanwale and Bamire(2000) claimed that saving behaviors of farmers in developing countries is less dependent on the absolute level of aggregate income, but more dependent on other factors on the relationship between current and expected income, the nature of the business, household size, wealth and demographic factors like age. Adeyemo and Akala(1992), for instance, showed that there is a high degree of responsiveness of savings to change among fishermen in the riverine areas of Nigeria.

On the other hand, investment could be considered as an act of laying out money in return for a future financial reward or the sacrifice of something now for the prospect of later benefits (Ajayi,1998). According to Olofin (2001), investment is any form of producer durable that is capable of contributing to the production of goods and services. Investment spending or expenditure to him would be any form of outlay, either by individuals or corporate units as firms or institutions such as government, for the purchase of such durables. Therefore, investment in their context refers to the purchase of real tangible assets such as machines, factories or stock of goods and services for further use as opposed to present consumption. Investment is a process of exchanging income for assets or converting forms into productive economic unit based for higher return or higher rate of economic value in future period for the purpose of gaining income.Odoemenem(1991),however, was of the view that small scale farmers invested their savings in two major areas; the agricultural and non-agricultural sectors. Investment in the agricultural sector or farm activity includes the purchase of fertilizer and chemicals hired labour and buying more land for farming while non-agricultural sector are mainly centered on education, trade expansion, building houses, dowry obligation and purchase of durable assets.

In line with the above concepts, savings and investment in the rural economy appear to be in monetized and non-monetized forms. This could be attributed to the subsistent nature of the economy. This further implies that for any meaningful investment to be obtained, a sound saving mobilization has to be pursued. Although, when the increments and funds are spent on household expenditure, farming economy and economy growth tend to be jeopardized,adequate integration of savings and investment programmes into development strategies are capable of improving resource allocation, promoting equitable distribution of income and reducing credit delivery and recovering cost. The government, armed with the awareness of the contribution of savings and investment strategies among farmer cooperatives, agro-processors, and SMEs to the economy, have been encouraged to establish programs involved in loan schemes such as the Family Economic Advancement Programme (FEAP), Cooperative Federation of Nigeria (CFN), Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB) amongst others.


There are several problems that affect the level of savings and investment strategies of agro-processors. While acknowledging that socio-economic characteristics of the agro-processors may vary from one occupation to another, recent studies like Adeyemo and Bamire (2005) suggest that socio-economic characteristics such as age, sex, farming experience, household size…etc, affect the level of savings and investment strategies among agro-processors. 

One of the problems confronting the development of the agricultural sector in Nigeria could be attributed to inadequate savings and investment by the small scale farmers (and agro-processors). Despite this problem, policymakers have not really drawn up adequate and comprehensive rural savings schemes that will ginger the farmers to invest their capital productively (Ogwanighie,1997).

Many farmers (and agro-processors) in Nigeria have not been able to finance their businesses due to poor access to credit, poor savings rate, risk and uncertainty, poor weather condition among other difficulties, thereby resulting in other means of mobilizing savings and funds for investment such as cooperatives and other informal financial institutions. Odoemenem, et al. (2005) observed that farmers make use of informal financial sectors to mobilize savings to develop their rural communities. They further observed that rural farmers make use of informal financial institutions because they give them access to loans they cannot get from formal financial institutions due to lack of collateral. Though, this sector has its own prevalent problems such as inadequate capital base for operation, poor record-keeping, crude accounting system, gross mismanagement; farmers still prefer them to banks.

Recently, there has been an upsurge of interest among development economists, governments, and international donor organizations to increase financial savings in developing countries, particularly in rural areas and among poor households. However, a large number of developing countries are unable to mobilize the potential savings of the non-corporate sector because the structure of their financial institutions, financial instruments, and financial policies are not sound (Reardon,2000).

In view of this, with a major focus on cassava processors (those into fufu production), the questions of interest in this study are;

What are the socio-economic characteristics of the cassava processors in the study area? What is the investment pattern of the cassava processors in the study area? What are the existing income levels of the cassava processors in the study area? What is the savings rate of the cassava processors in the study area? What are the determinants of savings and investment among the cassava processors in the study area?

This study attempts to provide answers to the questions identified.


The broad objective of this study is to analyze or assess the savings and investment strategies of cassava processors using Yewa North Local Government Area as a study case. The specific objectives are to;

describe the socio-economic characteristics of the cassava processors in the study area. describe the investment pattern of the cassava processors. estimate the income level of the cassava processors. determine the savings rate among the respondents. estimate the determinants of savings and investment strategies among the respondents.


The justification of this study is centered on the importance of savings and investment and also the essence of savings and investment strategies as it concerns the cassava processors’ businesses. In developing countries, especially Nigeria, investments in agricultural production and its related activities have not been given expected priority, even among the farmers who come together as a group to assist each other, either through cooperatives or other informal means; and this can be attributed to some factors.

Ayanwale and Bamire (2000) claimed that the saving behavior of cooperative farmers (cassava processors inclusive) in developing countries is less dependent on the absolute level of aggregate income and more dependent on the relationship between current and expected income, the nature of the business, household size, wealth and demographic variables among other related factors. However, Adeyemo and Bamire (2005) examined the pattern of savings and investment among cooperative farmers (or cassava processors in this case) in Southwestern Nigeria and reported that income, loan repayment and amount of money borrowed are significant variables that influenced saving pattern. This research study is set to help clear the air on savings and investment among farmers as well as cassava processors and also the determinants of the savings and investment strategies with regards to the available infrastructure on the study.

Information from this research study on the analysis of savings and investment strategies among cassava processors could help policymakers and credit agencies for effective and efficient credit services delivery of loan schemes that could increase the production of agricultural produce and value-added finished goods as well as the general well-being of the cassava processors.


This research study was divided into five chapters, with each chapter for a definite purpose. Chapter One consisted of the introduction which includes the background of the study, problem statement and research questions, objectives of the study, justification of the study and plan of the study respectively. Chapter Two covered the literature review and theoretical background. Chapter Three entailed the methodology and procedures that were involved in carrying out the research study. Chapter Four involved the empirical findings and the results of the findings. Chapter Five featured the summary of the findings, conclusion, and recommendation.




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