IMPACT OF MICROFINANCE ON RICE PRODUCTION

IMPACT OF MICROFINANCE ON RICE PRODUCTION IN AYEYARWADY REGION
Contents
Introduction 1
Research Background 1
Problem Statement 1
Research Objectives 2
Research Questions 2
Rationale of the Study 3
Outline of Thesis 3
Methodology 4
Research Design 4
The Study Area 5
Method of Data Analysis 5
Study Timeframe 8
References 9

Introduction
Research Background
Microfinance is about providing financial services such as microfinance, microinsurance, and
microfinance to the poor. Myanmar's economy is based on the agricultural economy and 10% of
its foreign exchange comes from agricultural exports (Myanmar Customs Department, 2014).
Since national development is dominated by rural development, agricultural development is an
important factor in reducing poverty. In response, the government encourages the development
of micro savings and credit enterprises, provides microcredits to small farmers, and improves
the socio-economic situation of the rural population. Muhammad Yunus (1976) defined
microfinance as "a means of providing credit to non-traditional borrowers (such as the poor in
rural or underdeveloped areas), usually in the form of unsecured microloans." According to
Ledgerwood (2002), “Microfinance is to provide a wide range of financial services, such as
deposits, loans, savings, payment services, remittances and insurance, to poor and low-income
households and their micro-enterprises excluded from financial services. Finance system.”
(Quoted from Giradi and Mwakeje, 2013, p. 227). Then repay the installment loan.
Problem Statement
The agricultural sector is the backbone of Myanmar’s economy, accounting for about
30% to 40% of GDP (World Banking Group, 2014) 1. rice is the staple food of Myanmar and
one of the main export products of the development of focuses on rural development, and the
development of agriculture is an important factor in poverty reduction. The main problem is the
lack of extension services available to farmers, which leads to low profitability. Farmers always
suffer from buying agricultural inputs such as seeds and fertilizers. Most farmers in Myanmar
use their own seeds and few technical agricultural tips. However, there are several types of
informal loan mechanisms. For example, the loans can be related to banking agents or real
estate businesses. These include the liaison service between such broker services, including the
intermediary service between the lender bank and the borrower. In the informal loan market,
interest rates can vary between 3% and 8%, depending on the type of collateral placed ((Forech,
Thein, Waldshmidt, 2013, p.17) 2. The typical payback period is three to six months,

sometimes it can be extended. However, due to the short repayment period, many people who
obtained these loans made 4,444 payments by selling their properties.
Therefore, the government allows the provision of small loans and savings services to
people in rural areas who do not have access to banking services. The government provided
input subsidies, including a pool of funds as a contribution to the sector. The borrowers
received much lower loan interest rates than the interest rates they paid to informal lenders.
However, microfinance is still limited and its impact is unclear. According to Ko Ko (2013),
“Providing microfinance to farmers can meet urgent needs, but in the long term it will not
improve the socio-economic lives of farmers, which can create a burden of debt.
This think around looks for to analyze the ampleness between credit supply and the
needs of rice ranchers in Central Benin, in organize to recognize approaches for moved forward
agricultural-oriented cash related organizations. In organize to ensure nourishment self-
sufficiency for rice, with the prospect of serving sub-regional and territorial markets, it is
principal to set up financing plans custom fitted to the prerequisites of rice ranchers. Financing
hindrances interior the agrarian parcel, in this way, constrain the valuable capacity of down and
out agriculturists (Shah et al. 2008). Interior the setting of expanding inquire for common
financing in making nations, counting Benin, commercial banks appear up a compelled
captivated in financing this division (Kodjo et al. In Sub-Saharan Africa, the agrarian division
plays a key parcel in taking care of disheartening and advancing nourishment security (Sheahan
and Barrett 2014; Affognon et al. 2015). Giving farmers with palatable inputs may develop
agrarian enhancement (Shah et al. 2008). The show think almost was built on an arranges
framework combining the characteristics of rice farmers and their farms, the money related
organizations publicized (Kumar et al. This discourages the modernization of cultivation by
lessening the utilize of imaginative progressions (Adégbola et al. 2009; Tarchiani et al. 2017).
Without a doubt, rice has powerfully finished up a basic food in both nation and urban districts
of Benin and contributes to food security (Konnon et al. 2014). 2012), the categorization of rice
agriculturists concurring to their wants (Aoudji et al. Microfinance has, in this way, finished up
the foremost supplier of provincial finance (Wampfler and Lapenu 2002; Morvant-Roux et al.
2010). Recording the specific necessities of farmers appear offer assistance the government and
other accomplices in agrarian financing in making palatable approaches to fulfill these
prerequisite.