New Journal Publication – Fertilizer subsidies, political influence and local food prices in sub-Saharan Africa: Evidence from Nigeria
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of “Fertilizer subsidies, political influence and local food prices in sub-Saharan Africa: Evidence from Nigeria” by Hiroyuki Takeshima (Research Fellow, IFPRI) and Lenis Saweda O. Liverpool-Tasie (Assistant Professor, MSU), in Food Policy (Vol. 54). A version of this publication was previously published as a conference paper prepared for presentation at the Agricultural & Applied Economics Association’s 2013 AAEA & CAES Joint Annual Meeting in Washington, DC.
Abstract: The last decade has seen a resurgence in the use of fertilizer subsidies in sub-Saharan Africa. However, there is limited empirical evidence on the effects of fertilizer subsidy programs on local food prices. Using an instrumental variables approach, we explore the effect of a fertilizer subsidy program on the seasonal growth rates of grain prices in Nigeria. Our results suggest that the fertilizer subsidy program had very small effects on the growth rates of grain prices between the post-planting and post-harvesting seasons. We also find that political influence played a role in the distribution of subsidized fertilizer. We discuss how the weak effects on the price growth rates may be caused by low market orientation, output market structures, greater focus on farmers’ incomes, low marginal productivity of fertilizer, and politically influenced targeting.
New Journal Publication – Productivity effects of sustainable intensification: The case of urea deep placement for rice production in Niger State, Nigeria
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of “Productivity effects of sustainable intensification: The case of urea deep placement for rice production in Niger State, Nigeria” by Lenis Saweda O. Liverpool-Tasie (Assistant Professor, MSU), Serge Adjognon (Graduate Research Assistant, MSU), and Oluyemisi Kuku-Shittu (Associate Research Fellow, IFPRI-NSSP) , in the African Journal of Agricultural and Resource Economics (Vol. 10, No 1).
Abstract: This paper uses household data to explore the yield effects of an intensification practice called urea deep placement (UDP) in Nigeria. The propensity score matching and instrumental variables methods provide consistent evidence of a positive and significant effect of UDP on rice yields. The Rosenbaum sensitivity analysis reveals that these results are not likely driven by unobservable factors. The paper also finds that farmers’ yields are further enhanced by adhering to several prescribed practices, confirming the potential for UDP to significantly improve rice yields.
New Journal Publication: The Effect of Perception of Extension Service on Small Farm Holders Agricultural Production
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of “The Effect of Perception of Extension Service on Small Farm Holders Agricultural Production” by NSSP Senior Research Assistant, Motunrayo Oyeyemi, in the Journal of Economics and Sustainable Development, (Vol. 6, No 12).
Empirical studies have suggested that agricultural extension can increase agricultural productivity. However, the increase in productivity relies largely on various auxiliary issues. Thus, this particular study was conducted among a subset group of southern-African farmers in order to examine the relationship between the provision of extension services and increased productivity in a regional context. An analysis of views in perception of these small scale farmers was used as a guide in estimating the efficacy of extension services. Perception as an indicator was then examined to access its extrapolative value in agricultural policies. The views of these farmers were analyzed using regression analysis to determine how extension services affected their performance. The findings revealed that positive perception extension services correlates to negative agricultural performance. While poor perceptions of extension services have tendencies of higher yield. Other factors of importance in the correlation identified were education, experience and exposure. These factors influenced perceptions and essentially agricultural yield.
New Publication in the NSSP Working Paper Series: “Commercial Banks’ Response to Government’s Financial Stimulus for Improved Agricultural Financing in Nigeria”
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of the paper entitled “Commercial Banks’ Response to Government’s Financial Stimulus for Improved Agricultural Financing in Nigeria” by Prof. Aderibigbe S. Olomola and Maryam Yaro in the NSSP Working Paper Series (Working Paper No. 28).
Abstract: This study
- Examines the implementation of recent agricultural finance policies and incentives associated with the Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) and the stimulus funds for boosting agricultural lending, the Commercial Agricultural Credit Scheme (CACS),
- Determines the impact of these financial capital interventions (stimulus to the banking sector) through the instrumentality of CACS on the flow of credit to the agricultural sector,
- Examines the factors militating against increased funding of agriculture by the banking sector, and
- Articulates policies and strategies for improved participation of the banking sector in agricultural financing in Nigeria. The study was executed using data obtained from all the commercial banks in the country in a survey conducted between March and September 2013 plus secondary data covering the period from 2006 to 2012.
New Publication in the NSSP Working Paper Series: “Understanding the Framework for Intergovernmental Interactions in the Implementation of Nigeria’s Agricultural Transformation Agenda”
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of the paper entitled "Understanding the Framework for Intergovernmental Interactions in the Implementation of Nigeria’s Agricultural Transformation Agenda" by Prof. Aderibigbe S. Olomola in the NSSP Working Paper Series (Working Paper No. 27).
Abstract: This study focuses on intergovernmental interactions in Nigeria’s Agricultural Transformation Agenda (ATA). ATA may not be able to achieve its desired objectives unless the intergovernmental and inter-agency interactions are well understood, coordinated, and integrated into the design and implementation of the various ATA programs, especially those that are still being developed. Unfortunately, the interactions among the three tiers of government in Nigeria is still not recognized by policy makers as a major issue in refining the design of the transformation process and reinforcing it. No tier of government acting alone in making decisions that affect all three tiers of government can create an environment that will be sufficiently enabling to ensure that farmers and other beneficiaries of ATA initiatives receive the maximum benefits obtainable. If the buy-in of a particular level of government is not properly and meaningfully secured, implementation of programs can be fraught with delays and avoidable costs. These may jeopardize the sustainability of ATA. This study seeks to:
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of Onset Risk and Draft Animal Investment in Nigeria by Dr. Hiroyuki Takeshima (Research Fellow - IFPRI) in the Journal of International Agricultural Trade and Development (Vol. 9, Issue 2, 2015).
Abstract: Onset risk, the uncertainty in the onset of rainy season, is an important element of weather risk for African farmers with little access to formal insurance who engage in traditional rainfed farming. A knowledge gap still exists empirically on how onset risk may affect the investment decisions of these farmers. In particular, farm productivity in Africa still depends on substantial labor inputs at the onset of the rainy season, sometimes involving seasonal migration to rural areas. With credit and insurance market failure, poor access to weather-related information, and high labor mobility costs, high and increasing onset risk may affect farmers’ demand for farm mechanization. We test this hypothesis by investigating the effect of onset risk on farmers’ investment in draft animals in northern and central Nigeria. We use the example of a public project providing farmers with financial support for the acquisition of productive assets. We calculate the onset of the rainy season using daily rainfall data in various locations across Nigeria and identify locations that have experienced increasing, decreasing, or constant onset risk in the past few decades. We then exploit the panel structure of our dataset and employ stratified propensity score matching to estimate the average treatment effect on the treated, differentiated by the onset risk and its change. The results support our hypothesis. Farmers in areas with higher, increasing, or constant onset risk were more likely to invest in draft animals, and such effects are clearer among larger-scale farmers. Linkages are also clearer with onset risk compared to annual rainfall risk.
A version of this paper was previously published as an IFPRI Discussion Paper (No. 1198).
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of Farmer Preferences on Seed Purchase Timing: Some Evidence from Nigeria by Dr. Hiroyuki Takeshima (Research Fellow - IFPRI) and Dr. Latha Nagarajan (Economist - IFDC) in the Journal of Crop Improvement (Vol. 29, Issue 1, 2015).
Abstract: Timely availability of seeds, typically immediately before the planting season, is considered one of the important factors for rapid adoption of quality seeds of improved varieties in Sub-Saharan African (SSA) countries. Empirical information on whether farmers are willing to pay (WTP) premium for obtaining seeds at their desired timing can help in assessing the feasibility of public sector support for timely delivery of quality seeds of improved varieties. This study estimates how farmers’ WTP for seed varies depending on the timing of the purchase using both revealed preference (RP) and stated preference (SP) models. The results indicate that WTP varies with the timing. Low-income farmers in Nigeria may prefer to pay premium price for cowpea seeds if those seeds can be made available closer to the planting season, while most high-income farmers may pay the same price regardless of the timing. Implications for future research needs are discussed.
NSSP-IFPRI participates in a Strategy and Planning Workshop for the Knowledge Management (KM) Framework and System for the Agricultural Transformation Agenda (ATA)
Dr. George Mavrotas, NSSP-IFPRI Program Leader, was invited to participate in the main panel discussion for the Strategy and Planning of the Knowledge Management (KM) Framework for the Agricultural Transformation Agenda (ATA). The event, held on March 18, 2015 in Abuja, was jointly organized by the Nigerian Federal Ministry of Agriculture and Rural Development (FMARD), United Nations Development Programme (UNDP), the Bill and Melinda Gates Foundation (BMGF) and the World Bank. Mr. Francis Neuman, Knowledge Management Advisor, UNDP RSC-ESA, launched the four-day workshop by reiterating the value addition that KM brings to the ATA. Firstly, it serves to strengthen the ATA systematically through the KM System management and infrastructure components and secondly through its application - increasing access to information, impact on policy development, innovation and learning.
Dr. Mavrotas participated in a roundtable discussion with key stakeholder groups focusing on ways to create awareness to enable a clear direction on the importance and modalities for developing and implementing the KM Framework, System and Action plan. This is a key area of the ATA as it shapes a KM Framework that will clearly reflect stakeholder needs and accurately define the major principles and mechanisms by which ATA stakeholders will be guided while implementing the change process. The event was a follow up on the October 2014 conference, and in which Dr. Mavrotas presented on behalf of IFPRI-NSSP a white paper on the policy lessons emanating from other countries in this area, and on the identified capacity development needs in order to ensure that the goals of the ATA will be fully achieved.
The key stakeholder groups represented at the Panel Discussion were from the Ministry of Agriculture (Mr. Emebinah Ebuka, Consultant, Phillips Consulting Limited), Farmers Organization (Mrs. Lizzy Igbine, Nigerian Women Agro-Allied Farmers), Research Organizations (Dr. George Mavrotas, NSSP-IFPRI), the Agribusiness Private Sector (Mr. Daniel Udo, Agribusiness and Investment) and the Development Partners (Ms. Alefia Merchant, USAID Agriculture Development Officer). The discussion was moderated by Mr. Steffen Janus (Senior Operations Officer, Knowledge Hubs, World Bank). IFPRI expressed its commitment towards the direction of promoting data collaboration with competent access for sharing acquired data across the KM System. It was also stressed that the involvement of the Agricultural Research Council of Nigeria (ARCN) in the implementation of the KM Framework for ATA would be important as it can play a key role in strengthening the Nigerian agricultural research system.
New Publication: The Political Economy of Food Price Policy in Nigeria in Food Price Policy in an Era of Market Instability: A Political Economy Analysis
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of The Political Economy of Food Price Policy in Nigeria by NSSP Senior Economist/Consultant, Aderibigbe Olomola, as a chapter in Food Price in an Era of Market Instability: A Political Economy Analysis edited by Per Pinstrup-Andersen, and recently published by the Oxford University Press.
About this book: Food price volatility is one of the major challenges facing current and future global food systems. Since 2006, global food prices have fluctuated greatly around an increasing trend and price spikes were observed for key food commodities such as rice, wheat, and maize. The full or partial transmission of these global food price changes to individual developing countries, together with domestic food price changes, caused by domestic factors such as extreme weather events and market disruptions, caused governments to respond in a variety of ways. While there is ample description of the nature, content, and causes of food price fluctuations during the last 5 to 7 years, very little is known about the processes that led to policy responses or the relative power and behaviour of the participating stakeholder groups. Understanding how and why governments responded as they did is important to enhance the existing knowledge of the political economy of food price policy and to assist governments in their policy-making as they confront future food price fluctuations. This book presents results from political economy studies of food price policy in 14 developing countries as well as the United States and the European Union.
New Publication: Communities’ Perceptions and Knowledge of Ecosystem Services: Evidence from Rural Communities in Nigeria
The Nigeria Strategy Support Program (NSSP) is pleased to announce a new publication from the International Food Policy Research Institute's Environment and Production Technology Division entitled Communities’ Perceptions and Knowledge of Ecosystem Services: Evidence from Rural Communities in Nigeria by Wei Zhang, Edward Kato, Prapti Bhandary, Ephraim Nkonya, Hassan Ishaq Ibrahim, Mure Agbonlahor, and Hussaini Yusuf Ibrahim as the 1418th publication of the IFPRI Discussion Paper Series. The IFPRI Discussion Paper was published in February 2015.
Abstract: This research has been undertaken to improve our understanding of stakeholders’ knowledge and perception about ecosystem services (ES), which provides a valuable means of gaining insight into the opportunities and constraints that face ES management in a multiuser landscape. Land use preferences are influenced by a variety of motives, attitudes, and values intrinsic to every individual’s decisionmaking. Knowledge can affect attitudes and behavioral intentions, and a positive attitude toward the environment has been found to predict conservation practices. Using primary data collected from a village survey of 102 villages in Nigeria between November 2012 and February 2013, this study assesses local communities’ awareness, perceptions, and knowledge of a broad range of ES and examines the key factors that explain the variations in the level of awareness across communities, with a special focus on land uses within landscapes. We found that exposure to forest and lowland floodplains was positively correlated with people’s level of awareness of ES, highlighting the importance of direct experience and local context in shaping people’s perceptions toward ES. Such considerations should be taken into account when designing policies aimed at addressing natural resources and environmental management issues. While provisioning services were generally well recognized, consistent with findings of previous studies, a majority of the sampled villages also appreciated spiritual values as a cultural service. Communities’ awareness and knowledge about regulating and supporting ES were generally very low, including those services that are important for maintaining the stability and productivity of agroecosystems (for example, pollination and biological pest control), warranting a greater role for agricultural extension to play in influencing community levels of awareness of ES in Nigeria. Furthermore, incorporating new concepts and topics about ES into the primary school curriculum will better educate people about the importance of ES. Finally, our assessment of communities’ attitudes toward payments for environmental services suggests a need to respect local communities’ preferences, norms, and traditions when designing policies that encourage natural resources management.
NSSP-IFPRI contributes to the FMARD High-Level Policy Dialogue on Nutrition Sensitive Agriculture in Nigeria
The Nigeria Strategy Support Program (NSSP) of the International Food Policy Research Institute (IFPRI) was invited to speak at the High-Level Policy Dialogue on Nutrition Sensitive Agriculture in Nigeria held on March 17, 2015 in Abuja, Nigeria. The event, organized by the Nigerian Federal Ministry of Agriculture and Rural Development (FMARD), engaged influential stakeholders and development partners from Nigeria’s agricultural industry, representatives of international organizations, the donor community, NGOs and the civil society, in order to focus on the nation’s agricultural and nutrition policy. In particular the event’s main objective was to drive a high profile advocacy effort to raise the profile of nutrition sensitive agriculture and shape agricultural policy efforts that would enhance nutrition in Nigeria, and to create a shared understanding and engage international expertise and best practices on nutrition transformative agricultural policies and programmes.
As part of the above event, Dr. George Mavrotas, NSSP-IFPRI Program Leader, was invited to give a presentation on the key findings and policy lessons emanating from the Global Nutrition Report (GNR) 2014 published by IFPRI in November 2014. The presentation reflected also on key statistics from the GNR, such as that malnutrition accounts for 45 percent of global child death and that a 16 to 1 return exists on nutrition investments. These were cited by the Honorable Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, as clear signs of the need to mainstream nutrition into agriculture. The event highlighted inter alia the need for improving data on nutrition to provide ancillary benefits such as the creation of indices for Nigerian states to measure performance on key public nutrition programme efforts to meet the needs of malnourished individuals and to improve the health and economic security of low-income families. It was also stressed that access to more accurate data may improve policies and practices that would expand the reach of federal nutrition programs.
In addition, Dr. Mavrotas was a panelist in the main panel on Nutrition-Transformative Agriculture Policy which included the Honorable Minister of Agriculture and Rural Development, Dr. Yaya Olaniran (Ambassador and Nigeria’s Permanent Representative to the United Nations Food and Agriculture Orgarnization (FAO), World Food Programme (WFP) and the International Fund for Agriculture and Rural Development (IFAD) in Rome), Ms. Ada Osakwe (Senior Investment Advisor to the Honorable Minister of Agriculture and Rural Development), Professor Paul Amaza (Vice Chair of the Agricultural Transformation Agenda Policy Working Group), Ms. Emmy Simmons (Global Panel on Agriculture, Food Systems and Nutrition), and was moderated by Ms. Ndidi Nwuneli (Founder of Leap Africa). The event was concluded with the inauguration of the Interministerial Agriculture Nutrition Working Group, which included Ms. Margaret Adesugba as a member, NSSP-IFPRI Senior Research Assistant, and which was introduced by the Honorable Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina.
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of Market Imperfections for Tractor Service Provision in Nigeria by Hiroyuki Takeshima as the 1424 publication of the IFPRI Discussion Paper Series. The IFPRI Discussion Paper was published in March 2015.
Abstract: Agricultural mechanization often accompanies agricultural transformation. In some countries in Africa south of Sahara (SSA), such as Nigeria, the mechanization process appears slow, in spite of the declining share of the agricultural sector in the economy and employment. Knowledge gaps exist regarding this slow mechanization process, and filling this knowledge gap is important in identifying appropriate policies on agricultural mechanization in Nigeria. In Nigeria, average horsepower and prices of tractors appear high, despite the scarcity of tractors. These patterns are different from the experiences in other parts of the world where initially tractor horsepower was often smaller (for example Asia), or farmers were better endowed with land and wealth (the Americas). In Nigeria, joint ownership of tractors is rare, and formal loans are often unavailable due to high transactions costs. IFPRI’s survey in Kaduna and Nasarawa states in 2013 also suggested that the spatial mobility of tractors is generally low, and uses are highly seasonal (Takeshima et al. 2014). There do not seem to be plausible explanations for the seeming dominance of large tractor use, based on the available information of the prices and soils. Nevertheless, these patterns seem driven by private sector’s own initiative rather than by governments’ policies. Indivisibility of large tractors and limited mobility of supplies may cause the imperfection in the custom hiring market. In order to distinguish the impacts of technology adoption at the extensive margin from those at the intensive margin, in the empirical analyses we tested these hypotheses focusing on the differences among marginal adopters of tractor hiring services and nonadopters of similar characteristics. The results are two-fold: (1) adoptions patterns of tractor services are partly explained by basic factor endowments, suggesting that the market for custom hiring is in some way functioning efficiently in response to economic conditions; (2) adoptions are, however, affected by supply-side factors including the presence of large farm households (and thus potential tractor owners) within the district, and (3) per capita household expenditure level differs significantly between the marginal adopters and nonadopters of similar characteristics. This difference seems to arise from the adoption per se, rather than the intensity of adoption, which is consistent with the hypothesis of the imperfection of the custom hiring market.
IFPRI’s flagship report puts into perspective the major food policy issues, developments, and decisions in 2014 and highlights challenges and opportunities for 2015. Drawing on rigorous research, IFPRI researchers and other distinguished food policy experts consider a wide range of crucial questions:
- How can middle income countries, which despite becoming more affluent are still home to the majority of the world’s hungry people, address their food and nutrition security challenges?
- What is the role of improved sanitation in shaping key nutrition outcomes, especially for children?
- How can we support smallholder farmers in “moving up” in agriculture or “moving out” of the sector altogether?
- What social protection measures help shield vulnerable people effectively and efficiently against an increasing number of shocks?
- How can we best build and regulate the capacity of actors along the food chain to tackle food safety and health risks?
- How should we address food and nutrition security of people living in conflict zones?
- What policies can support the sustainable development of the aquaculture sector as the global demand for fish skyrockets?
- What have been the major developments in regions and countries where poor and hungry people reside?
The 2014–2015 Global Food Policy Report also presents data for several key food policy indicators, including country-level data on hunger, agricultural research spending, and capacity for food policy research. In addition to illustrative figures, tables, and a timeline of food policy events during the past year, the report also presents the results of a global opinion poll on the current state of food policy.
New Publication – Determinants of Change and Household Responses to Food Insecurity: Empirical Evidence from Nigeria
The Nigeria Strategy Support Program (NSSP) is pleased to announce the publication of Determinants of Change and Household Responses to Food Insecurity: Empirical Evidence from Nigeria by NSSP Research Analyst, Hyacinth Edeh, and former NSSP Program Leader, Kwabena Gyimah-Brempong, in the African Journal of Agriculture (Vol. 10 Issue 5). The article was published on January 29, 2015.
Abstract: Limited economic and physical capacities as well as environmental and economic shocks have constrained the ability of many Nigerian households to feed themselves adequately. This has resulted in food shortages; and they had to adopt various consumption-related strategies to mitigate the effect of the shortfalls. Using the 2010/2011 Nigeria Living Standards Measurement Study-Integrated Surveys on Agriculture data and the reduced consumption coping strategy index (RCCSI), this paper examined the determinants of change in food (in)security of Nigerian households in the two major farming periods. Results showed that there were significant differences in the food insecurity status of households in the two periods. The likelihood of change in the food security status were determined by sex of the household head, farmland holdings, nature of livelihood, shocks associated with land loss, and climate change events. Coping strategies in the two periods were dietary change and rationing strategies. However, the frequency of use of these strategies was higher in the post-planting period and more among female-headed households. The use of high-yielding climate-resistant crops and reduction in post-harvest losses through processing and improved storage facilities were advocated.
The Ghana Strategy Support Program (GSSP) and the Nigeria Strategy Support Program (NSSP) of the International Food Policy Research Institute (IFPRI) held a joint retreat in Ghana from January 19-23, 2015. The retreat was attended by researchers and staff from both NSSP and GSSP along with Washington, DC based researchers that contribute to these programs. The retreat included planning days for each program, a roundtable discussion on “Agriculture, Youth and Employment” co-hosted by IFPRI and ISSER, a dissemination event on the Nigerian rice economy and value chains in Ghana, and a field visit to the Kpong Irrigation Scheme.
The Ghana Strategy Support Program (GSSP) and the Nigeria Strategy Support Program (NSSP) of the International Food Policy Research Institute (IFPRI) held a joint seminar covering two topics: 1) the rice economy in Nigeria and 2) value chains in Ghana, on January 22, 2015 in Accra, Ghana. The event was attended by members of the Ghanaian Ministry of Agriculture and Ministry of Finance, Development Partners, and other stakeholders. The event was chaired by Dr. Paul Dorosh, Division Director, Development Strategy and Governance Division, IFPRI.
Dr. Hiroyuki Takeshima, Research Fellow, IFPRI and Dr. Michael Johnson, Research Fellow, IFRPI, presented findings on the Nigerian experience from their study, “Assessing the Potential and Policy Alternatives for Achieving Rice Competitiveness and Growth in Nigeria” (a policy note is available here). A more comprehensive overview of Nigeria’s rice economy will be published in the upcoming year in the forthcoming book, Achieving Rice Self-Sufficiency in Nigeria: Options for Future Strategies and Policies, edited by Dr. Kwabena Gyimah-Brempong, Dr. Michael Johnson, and Dr. Hiroyuki Takeshima and published by the University of Pennsylvania Press. The Ghanaian experience was also presented in a presentation entitled, “Reaching Smallholders through Value Chain Development” by Dr. Shashidhara Kolavalli, GSSP Program Leader/Senior Research Fellow, IFPRI.
The Institute of Statistical Social and Economic Research (ISSER) in collaboration with the International Food Policy Research Institute (IFPRI) held a roundtable discussion on the theme Youth, Employment and Agriculture on January 22, 2015 at the University of Ghana. The roundtable discussion looked at how the agricultural sector could serve as a provider of employment for youth and the conditions necessary for youth to embrace agriculture as a profession in Ghana. Presentations were made by each of the panelists on various topics of relevance to the above theme, such as: the dynamics of the Ghanaian labor market; the perceptions and aspirations of the youth; how agriculture can provide the kind of lifestyle that usually attracts the youth to urban areas and the effectiveness of public intervention; and global best practices. The panel consisted of: Dr. William Baah-Boateng (Senior Lecturer, Economics Department, University of Ghana), Dr. Nana Akua Anyidoho (Senior Research Fellow, ISEER), Alhaji Adam Mahama (National Coordinator, Youth in Agriculture Programme), Dr. Paul Dorosh (Division Director, Development Strategy and Governance Division, IFPRI), and Dr. James Thurlow (Senior Research Fellow, IFPRI). The discussion was moderated by Professor Felix Asante (Director, ISSER).
Abstract: The credit market serving agriculture in Nigeria is encumbered by operational and administrative inadequacies and the discriminatory tendencies of financial institutions. The government has implemented policies to redress the situation, but small-scale farmers have not benefitted from these incentives to any reasonable degree. This makes it imperative to examine the factors circumscribing loan demand and the various rationing mechanisms. To this end, this study seeks to (1) examine the nature of risks facing small-scale farmer-borrowers in Nigeria, (2) analyze the demand for agricultural credit by farmers and highlight the key determinants of this demand, (3) ascertain the extent to which farmers are credit rationed and the factors influencing the emerging rationing scenarios, and (4) suggest policy measures to address the problem of agricultural credit rationing and enhance the demand for credit. The study employs primary data obtained from 1,200 small-scale farmers through a survey conducted in 2013 across the six geopolitical zones of the country. Methodologically, the study extends the analysis of credit rationing beyond quantity rationing and presents explicit econometric models for analyzing the determinants of three types of credit rationing:quantity rationing, risk rationing, and price rationing. The seemingly unrelated regression model is employed to ascertain the determinants of credit rationing. The results show that there is a higher probability that farmers will be rejected than that they will be given a loan amount lower than what was requested. We find that gender, geographical location, and marital status have no statistically significant effect on the probability that farmers will be quantity rationed. To address the credit rationing challenges and improve demand for loans by small-scale farmers, we urge banks to mobilize their resources to train potential borrowers and establish loan-monitoring committees at the grassroots level to serve as insurance against the risk of loan default.