Financial Literacy, Food Security, and Farmers’ Mental Health in Rural Nigeria: Insights from the Cashless Policy Enactment

Nigeria has witnessed significant efforts to promote the digitalization of her economy through the implementation of the cashless policy using Naira redesign and cash withdrawal limits as instruments. However, while Digital Financial Literacy (DFL) is crucial for farmers to cope with monetary policy shocks, DFL has not been in favor of households in rural Nigeria where farmers reside thus exacerbating their economic vulnerabilities. This study thus examined the relationship between rural farmers’ DFL scores and economic vulnerability outcomes specifically food security and mental health, 3 months post-enactment of the last nationwide cashless policy using the Multidimensional Digital Financial Literacy Index (MDFLI), Household Food Insecurity Access Scale (HFIAS), the Generalized Anxiety Disorder Scale (GAD-7) and the multinomial regression model. A 4-stage method of random sampling was employed to choose 432 rural farming households from three states in the southwestern geopolitical zone of Nigeria namely: Lagos, Ogun, and Osun. The result revealed that the DFL score of farmers in rural southwestern Nigeria is generally low (31.13%). The multinomial analysis results revealed a strong inverse relationship between the DFL scores of rural farmers and their GAD-7 scores, a proxy to measure their mental stability. In addition, rural farmers’ food security status was hampered following the cashless policies enactment with an average HFIAS score of 14.49, only 3.24% of the households were food security with the remaining 97% being food insecure at different degrees. It is therefore recommended that efforts should be geared towards closing the financial literacy gap in rural Nigeria.