EFFECTSOF ACCESS TO LOAN ON THE FOOD INSECURITYSTATUS OF RURAL HOUSEHOLDS IN NIGERIA

Abstract

ABSTRACT Historically, Nigeria has been plagued with declining food security, arising from inadequate agricultural financing. This menace had reduced the prospects of economic growth and increased the level of starvation in the country. Thus, this study evaluated the role of loan access on rural household food insecurity status in Nigeria. A multistage sampling procedure was used to select 14,671 rural households for the study. Secondary data on rural households’ socio-economic characteristics, sources of credit accessed, factors influencing credit use and food insecurity status of the rural households from the 2018/2019 Nigeria Living Standard Survey (NLSS) dataset was used for this study. Data collected were analysed using descriptive (frequency counts, percentages, means) statistics, the Foster, Greer and Thorbeck (FGT), Double Hurdle Model and Probit regression models. Results shows that 83.7% of the respondents were male, 57.1% were married and 62.2% had formal education with a mean age and household size of 48years and 6 persons respectively. Most (71.9%) of the respondents owned agricultural land but 53.5% have no right to sell land and 87.9% do not own agribusinesses. Also, 74.1% of the household heads applied for credit, and 25.9% obtained credit while 14.6% sourced their credit from friends/relatives with an average amount of ₦67,832.63 accessed. The Double Hurdle model results show that respondents’ age (t= -2.120; p<0.05), level of education (t= 5.941; p<0.01) and land ownership (t= 2.664; p<0.01) significantly influence amount of credit obtained while land ownership (t= 3.314), years of schooling (t= 5.334) and monthly income (t= 4.942) significantly (p<0.01) influence their accessibility to credit. The food security (FGT) results revealed that 44.4% of the households were food insecure. The Probit regression results reveal that age (β= 0.002; p<0.05), marital status (β= -0.061; p<0.05), sex (β= -0.276; p<0.01), years of schooling (β= -0.015; p<0.01), land ownership (β= -0.569; p<0.01) and ownership of non-agribusiness (β= -0.085; p<0.05) significantly influences the household food insecurity status. However, access to loan had no significant effect on the food insecurity status of the rural households (β= -0.045; p>0.05). This study concluded that loan access had not contributed significantly to the food insecurity status of the rural households in Nigeria. However, household becomes less vulnerable to food insecurity with increasing educational attainment, land ownership and involvement in non-agribusiness activities. Therefore, due to the importance of education in reducing food insecurity, educational development should be approached systemically while all stakeholders should prioritize the provision of credit to improve the living conditions of farming households in the rural communities.