Distributional impacts of anchor borrower program on the welfare of rice farming households in Oyo State, Nigeria

Abstract

PurposeThis study assessed the heterogeneous impact of the Anchor Borrower Program (ABP) on the welfare distribution of rice farming households in Nigeria.Design/methodology/approachSelf-selection bias and treatment endogeneity were accounted for by employing the Instrumental Variable Quantile Regression (IVQR) model. The estimates obtained from the IVQR model were further compared with those from the conventional quantile regression, and quantile regression using Propensity Score Matching. This was to highlight the extent to which endogeneity bias has been purged from the treatment, in order to establish a consistent causal link between participation in the ABP and the welfare of a cross-section of rice farming households.FindingsABP farmers had significantly higher rice yields across all quantiles of the yield distribution under treatment exogeneity assumption, and in only two quantiles upon controlling for observable confounders. However, this yield gain did not translate to higher Per capita Consumption Expenditure (PCE). The estimates of the more robust IVQR model provided further evidence that the rice yield and PCE of ABP farmers are not statistically different from that of non-ABP farmers across all quantiles of the welfare distribution.Social implicationsThe negligible impact of ABP was relatively higher for lower-yielding households. Thus, implying that, although the ABP is a pro-poor development intervention, the program has not been sufficiently implemented to significantly improve the welfare of the dominant resource-poor farming households in Nigeria.Originality/valueThis study assessed the impact of ABP beyond the conventional potential mean outcome framework by accounting for heterogeneity in treatment effect.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2023-0083