Abstract
PurposeFarmers are the largest group of financially excluded persons in Nigeria, thereby highlighting the supply shortfall in finance to agriculture in Nigeria. Availability of finance would go a long way in improving output and productivity in agriculture, and consequently help in reducing poverty. This study conducts an empirical investigation of the effects of financial inclusion on agricultural productivity in Nigeria.Design/methodology/approachThis study makes use of the Living Standards Measurement Study–Integrated Surveys on Agriculture (LSMS-ISA). This is a new data set on agricultural households which contains information on agricultural activities and various household activities, including banking, savings and insurance behaviour. Considering the data are such that there are observations for households over three time periods, the study exploits the time series and cross-section dimension of the data by using panel data estimation.FindingsThe empirical results of the study show that financial inclusion, irrespective of how it is measured, has exerted positive and statistically significant effects on agricultural productivity in Nigeria.Originality/valueWhile considerable research has been conducted to examine how finance affects broad macroeconomic aggregates, little is known about the effects of finance at the household and individual level. It is important to explicitly account for financial inclusion when examining the effects of finance on individuals and households. This study improves on existing research and offers new insights into the effects of financial inclusion on the economic activities of agricultural households in Nigeria.
Highlights
The Nigerian economy was a predominantly agrarian one at independence in 1960, with agriculture contributing 63.8% to GDP, but the share of agriculture in output has dropped over the years
This study has conducted an empirical analysis of the effects of financial inclusion on agricultural productivity in Nigeria
We made use of a new panel data set from the LSMS–ISA to examine the behaviour of agricultural households
Summary
The Nigerian economy was a predominantly agrarian one at independence in 1960, with agriculture contributing 63.8% to GDP, but the share of agriculture in output has dropped over the years. Agriculture contributed 41.2% to GDP in 1970, but this had dropped to 20.6% in 1980. It rose to 37% in 1990, it had fallen to 27% in 2000. New figures based on the rebased GDP show that agriculture’s contribution to GDP had fallen further to 23.8% in 2010, 20.2% in 2014 and 21.42% in 2018 (Central Bank of Nigeria, 2019). In 1981, the value of Nigeria’s imported food and live animals was N1.8 billion, but this had surged phenomenally to N1.4 trillion by 2018 (Central Bank of Nigeria, 2019)
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