Financial access and agricultural productivity in sub-Saharan Africa
Keywords:
Agriculture, Auto Regressive Distribution Lag, Developing countries, Financial Access, Panel DataAbstract
The agricultural sector is one of the vital sectors in most developing countries. However, unfortunately, the sector is often less important in most of these developing countries, which has led to a continued decline in agricultural output. While the sector is faced with several challenges, it is believed that a major obstacle to agricultural productivity is the lack of access to credit. This study, therefore, assesses the impact of financial access on agricultural productivity in 17 countries in Sub-Saharan Africa for the period 2001 to 2023. The study employed the ARDL on agricultural productivity measured by the Food Production index, financial access, and technological innovation, among others. The result revealed that financial access through agricultural credit to farmers was found to have an inverse and substantial impact on agricultural productivity only in the long run and an insignificant impact in the short run. Therefore, the study advocates among others for government expansion of financial access to smallholder farmers at lower interest rates and flexible repayment scheme as well as the introduction of innovative financial packages such as green finance and value-chain finance.
References
Adeyemo, J. T., Ahmed, A., Abaver, D. T., Riyadh, H. A., Tabash, M. I., & Lawal, A. I. (2024). Technological innovation and agricultural productivity in Nigeria amidst oil transition: ARDL analysis. Economies, 12(9), 253. https://doi.org/10.3390/economies12090253
Adeyombo, A. A., Ogunlusi, C. F., Oyelude, O. O., & Oyebode, A. O. (2024). Assessing the financial literacy of small and medium scale enterprise operators in Nigeria. International Journal of Professional Business Review, 9(11), e04820. https://doi.org/10.26668/businessreview/2024.v9i11.4820
Akpabio, E.S., Akeju, K.F., & Omotoso, K.O. (2024). E-Agriculture and food security in developing countries: Beaming the searchlight on Nigeria. Smart Agricultural Technology, 30(100689). https://doi.org/10.1016/j.atech.2024.100689
Asiedu, E., & Chimbar, N. (2020). Impact of remittances on male and female labor force participation patterns in Africa: Quasi‐experimental evidence from Ghana. Review of Development Economics, 24(3), 1009–1026. https://doi.org/10.1111/rode.12668.
Asongu, S. & Odhiambo, N. M. (2022) : Financial access and value added in Sub-Saharan Africa: Empirical evidence from the agricultural, manufacturing and service sectors, AGDI Working Paper, No. WP/22/009, African Governance and Development Institute (AGDI), Yaoundé
Balana, B. B., & Oyeyemi, M. A. (2022). Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria. World Development Sustainability, 1, 100012. https://doi.org/10.1016/j.wds.2022.100012
Beaman, L, Karlan, D. Thuysbaert, B. & Udry, C. (2023). Self-selection into credit markets: Evidence from agriculture in Mali”, Econometrica, 91(5).
Demirguc-Kunt, A. & L. Klapper. (2019). Financial inclusion in the Europe and Central Asia region,Policy Research Working Paper, 8830. World Bank, Washington, DC.
Demirguc-Kunt, A., Klapper, L., Singer, D. & Ansar, S. (2022) ‘The Global Findex Database: Financial inclusion, digital payments, and resilience in the age of COVID-19,’ World Bank, Washington, DC
Eleke, U. P., Lai-Solarin, W. I., Bamidele, J., Joel, O. J., Joel, A. F., &Sennuga, S. O. (2024). Influence of information and communication technology-based training on livestock production efficiency in Bwari Area Council, Abuja. Global Academic Journal of Agriculture and Biosciences, 6(6), 199–217. https://doi.org/10.36348/gajab.2024.v06i06.004
El-Said. A., Emara, N., & Pearlman, J. (2020). On the impact of financial inclusion on financial stability and inequality: The role of macro-prudential policies, Working Paper (20/60), Department of Economics, City St George's, University of London
Fowowe, B (2020): The effects of financial inclusion on agricultural productivity in Nigeria Journal of Economics and Development Emerald Publishing Limited
available on Emerald Insight at: https://www.emerald.com/insight/1859-0020.htm
Global Findex (2021). https://www.worldbank.org/en/publication/globalfindex
He, L., Zhou, L., Qi, J., Song, Y., & Jiang, M. (2024). The role of digital finance embedded in green agricultural development: Evidence from agribusiness enterprises in China. Land, 13(10), 1649. https://doi.org/10.3390/land13101649
Iddrisu, A. G, Donkor, G. N. A, & Abor, J. Y (2025) Green finance, financial inclusion and agricultural productivity in Africa Development and Sustainability in Economics and Finance, 7; 100060
Assouto, A. B., & Houngbeme, D. J. L. (2023). Access to credit and agricultural productivity: Evidence from maize producers in Benin. Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2196856
IFAD. (2021). Rural Finance Policy. Rome: International Fund for Agricultural Development.
Jayne, T.S., & Sanchez, P.A. (2021). Agricultural productivity must improve in sub-Saharan Africa. Science, 372(6546), 1045-1047.
Kafando, W. A., & Sakurai, T. (2024). Armed conflicts and household food insecurity: Effects and mechanisms. Agricultural Economics, 55(2), 313–328. https://doi.org/10.1111/agec.12814
Khan, F. U., Nouman, M., Negrut, L., Abban, J., Cismas, L. M., & Siddiqi, M. F. (2024). Constraints to agricultural finance in underdeveloped and developing countries: A systematic literature review. International Journal of Agricultural Sustainability, 22(1). https://doi.org/10.1080/14735903.2024.2329388
Louyindoula, H. Z, Bouity, C. A and Owonda, F (2023): Impact of Agricultural Credit on Productivity. Theoritical Economics Letters, 13 (6) https://www.scirp.org/journal/paperinformation?paperid=129723
Mapanje, O., Karuaihe, S., Machethe, C., & Amis, M. (2023). Financing sustainable agriculture in Sub-Saharan Africa: A Review of the Role of Financial Technologies. Sustainability, 15(5), 4587. https://doi.org/10.3390/su15054587
Menkeh, M. I. (2021). The impact of financial inclusion on agricultural development in Ngoketunjia division, north-west Cameroon. Dissertation: Swiss school of business and management, Geneva
Okello, G., Candiya, J. M. N., & Bongomin, C. A. (2020). Analyzing the relationship between financial literacy and financial inclusion by Microfinance banks in developing countries: Social network theoretical approach. International Journal of Sociology and Social Policy, 40, (11/12). 1257–1277. https://doi.org/10.1108/IJSSP-12-2019-0262
Olabinjo, O.O.& Opatola, S.B. (2023). Agriculture: A pathway to create a sustainable economy in Nigeria. Turkish Journal of Agricultural Engineering Research, 4(2), 317-326
Oladimeji, J. A., & Adegbite, E. O. (2019). Financial inclusion and economic growth: Empirical evidence from Nigeria. Proceedings of the international conference in advanced research in management, economics and accounting: Barcelona, Spain
Onwe, J.C., Ojide, M.G., Subhan, M., & Forgenie, D. (2024). Food security in Nigeria amidst globalization, Economic expansion and population growth: A wavelet coherence and QARDL analysis. Journal of Agriculture and Food Research, 101413. https://doi.org/10.1016/j.jafr.2024.101413
Osabohien, R., Adeleye, N., & De Alwis, T. (2020). Agro-financing and food production in Nigeria. Heliyon, 6(5), e04001. https://doi.org/10.1016/j.heliyon.2020.e04001
Ozili, P. K. (2022). Financial inclusion in Nigeria: An overview. International Journal of Banking and Finance, 17(2), 1-24. https://doi.10.32890/ ijbf2022.17.2.1
Sharimakin, A., & Dada, J. T. (2020). Access to finance, Indigenous technology and food security in Nigeria: case study of Ondo Central Senatorial District. Economics and Culture, 17(2), 75–87. https://doi.org/10.2478/jec-2020-0022
Simelane, K. S., & Worth, S. (2020). Food and nutrition security theory. Food and Nutrition Bulletin, 41(3), 367–379. https://doi.org/10.1177/0379572120925341
Teye, E. S., &Quarshie, P. T. (2021). Impact of agriculture finance in modern technologies adoption for enhanced productivity and rural household economic wellbeing in Ghana: A case study of rice farmers in Shai-Osudoku District. SocArXiv. https://doi.org/10.31235/osf.io/9ue2k
Ukonu, I. C., Wallace, C. A., & Lowe, N. M. (2023). Household food security and dietary diversity in south‐eastern Nigeria. Maternal and Child Nutrition, 20(3). https://doi.org/10.1111/mcn.13599
World Bank (2024). Food security update: World Bank solutions to food insecurity. https://www.worldbank.org/en/topic/agriculture/brief/food-security-update
World Bank (2024). Poverty, Prosperity, and Planet Report 2024. https://www.worldbank.org/en/publication/poverty-prosperity-and-planet
