MPACT OF MICROFINANCE BANKING SERVICES ON THE PERFORMANCE OF SMALLHOLDER RICE FARMERS IN KADUNA STATE, NIGERIA

Abstract

This study analyzes the impact of microfinance banking services on the performance of smallholder rice farmers in Kaduna State, Nigeria. Despite Nigeria's significant agricultural potential, smallholder farmers face multiple challenges, such as limited access to credit, insufficient infrastructure, and inadequate training, which hinder productivity. Microfinance institutions offer financial products like loans and savings, which are expected to enable farmers to invest in essential inputs and training, potentially boosting performance. The research employed a cross-sectional survey design and used primary data collected through a well-structured questionnaire administered to farmers organized into cooperatives. Stratified and simple random sampling techniques were used to select 179 respondents from three local government areas known for rice production. The data were analyzed using multiple regressions to test the relationship between microfinance services and farmers' performance. The findings reveal that microcredit and entrepreneurial skills training had significant positive impacts on farm performance at 1% level of probability which implies a unit increase in these variables will increase farmers’ performance, while micro-savings had a negative effect at 1% level of probability and this decreases farmers’ performance with a unit increase. The study shows that access to larger amounts of credit and enhanced entrepreneurial training can improve farmers' productivity and income, whereas improved savings programs are needed to foster financial discipline among farmers. It was recommended that government and financial institutions work together to enhance access to microfinance services, particularly in rural areas. Government should design policies to reduce barriers such as high interest rates and long repayment periods.