Access to credit and performance of small scale farmers in nigeria

Project Abstract

<p> </p><div><p>In spite of the attempts made by some studies to explore access to credit and its effect on output of small scale farmers in Nigeria, most of these studies did not apply the widely accepted impact assessment methodologies and therefore, may be subject to serious problems due to sample selection bias. This problem inspired this study which seeks to find the demographic and socio-economic features of small scale farmers in Nigeria which significantly determine their access to credit and the effect of credit access on the output of theses farmers, and a further attempt was made to check whether or not the poverty and marital statuses of small scale farmers who accessed credit caused a significant difference in their output using Instrumental Variable(IV) and Heckman Two-Step Estimation Techniques to correct for endogeneity and sample selection biases. Both the first stage of IV and first step of Heckman approach revealed that value of land, household size and the highest level of education of small scale farmers were, at 5% level, the significant determinants of their access to credit. Both techniques agree that household size, acreage cultivated, age in years, years of experience, sex and total rannual income of the small scale farmers were the variables that significantly influence their output at 5% level. However, they disagree on the effects of the highest level of education and marital status of these farmers on their outputs. While Heckman estimated them to have significant effect on small scale farmers’ output, the generalized method of moments showed they are not significant, even at 10% level, at determining the output of theses farmers. They also agreed that credit access, which has a negative significant effect on output at only 10% level, does not significantly impact output of small scale farmers at 5% level of significance. Again, among the small scale farmers who accessed credit, there were significant differences in their outputs due to their poverty and marital statuses. This study suggests that government and private financial institutions should consider improving their (financial) services to small scale farmers to boost their performance.</p><p></p></div><br> <br><p></p>

Project Overview