Factors Influencing Financial Inclusion Status of Agricultural Households in Nigeria

Abstract

Financial inclusion - a situation where individuals and firms have equal access to and usage of
affordable financial services and products, is widely acknowledged as having the potential in
assisting the attainment of equitable economic growth. Specifically, this study identified the
range of financial services available to agricultural households in Nigeria, determined the
financial inclusion status, and examined the factors that influence financial inclusion of
agricultural households in Nigeria. Data for the study were drawn from the fourth wave of the
Living Standard Measurement Study-Integrated Surveys on Agriculture 2018/19. Descriptive
statistics, Probit Regression model (PRM), and Alkire and Foster Method (AFM) were used to
analyse the data. Results show that 76.8% of household heads were male, 72.2% were married,
and 77.1% had primary school education with mean age and household size of 49.2 years and
6 persons respectively. Specifically, 41.5% of the respondents had bank accounts while 84.9%
and 96.2% had no access to credit and insurance policies respectively. AFM revealed that
58.2% of the households were financially included. PRM reveals that there was a significant
positive association between households’ financial inclusion and household size (γ = 0.010,
p<0.05). Other influencing factors of financial inclusion include; age of household head (γ=
0.011, p<0.01); household income (γ = 0.018, p<0.05); possession of phone (γ = 0.168,
p<0.05); access to internet (γ = 0.170, p<0.05); being a resident of Southeast (γ = 0.041, p<0.10)
and Southwest (γ = - 0.043, p<0.05). As financial inclusion can contribute to poverty alleviation
and boost economic growth, improved internet facilities, women- targeted, income, and
location-specific intervention should be provided for agricultural households in Nigeria so as
to enhance their financial inclusion status.