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Apr 30, 2022Keywords:
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Main Article Content
Effect of Financial Inclusion on Livelihood Diversification among Smallholder Farming Households in Oyo State, Nigeria
Abstract
Agricultural production in Nigeria is mainly rain-fed and highly vulnerable to weather fluctuations which adversely affect rural livelihoods. Diversification of livelihood activities beyond agriculture can be an effective strategy for mitigating the detrimental effects of climate change. The purpose of this study is to examine the effects of financial inclusion on livelihood diversification among the smallholder farming households in Oyo State, Nigeria. Primary data were collected through a well-structured questionnaire administered to 400 respondents who were randomly selected, using a multistage sampling technique. Simpson index with the Ordered logit regression model were used for the analysis. The result from the Simpson index of diversity shows that the smallholder farmers pursued some levels of diversification in their livelihoods activities and earned income from multiple sources, with about one-third being highly diversified. The ordered logit regression shows that the probability of the smallholder farming households diversifying their livelihood activities is strongly influenced by age, gender, marital status, and education of the household head, household size, total area of land cultivated, main livelihood activity, access to credit, and own a bank account. Access to credit and owning a bank account positively influenced livelihood diversification. The study recommends that stakeholders should make credit facilities accessible to the farmers to increase their production and revenue, which may influence their level of diversification. The respondents should also be encouraged to open a bank account as this may facilitate their access to loans and other financial benefits.
