Assessing the Impact of Microfinance on Agricultural Productivity and Income of Smallholder Farmers in Rural Nigeria

Abstract

The study assesses the impact of microfinance on agricultural productivity and income of smallholder farmers in rural Nigeria. The specific aims were to assess the impact of loan tenure on agricultural production and the income of smallholder farmers, and to assess the impact of loan size on agricultural production and the income of smallholder farmers in rural Nigeria. The research methodology used for this study was a descriptive survey. Data collection for the study was done by means of a questionnaire developed by the researcher, which had a five-point Likert scale format. Analysis of the data obtained from the questionnaire was conducted by use of descriptive statistics such as frequency and percentages, and inferential statistics such as Chi-square (χ2). Frequency and percentages were used for the analysis of demographic characteristics and research questions, whereas Chi-square (χ2) was used to test the hypotheses. The result revealed that Loan Tenure has a significant effect on agricultural productivity and income of smallholders, with a P-value of (0.000 < 0.05). Loan Size has a significant effect on agricultural productivity and income of smallholder farmers, with a P-value of (0.025 < 0.05), in rural Nigeria. The study concluded that microfinance has a significant positive impact on the agricultural productivity and income of smallholder farmers in rural Nigeria. The study recommended that microfinance institutions (MFIs) should intensify efforts to reach more smallholder farmers through targeted credit schemes and flexible loan products designed around the agricultural production cycle.