Financing Climate-smart Agriculture in Rural Nigeria: Does Access to Credit Matter?

The concerns about changes in rainfall and temperature patterns and low rate of technology adoption and utilization, which characterizes the subsistence farming practices in developing sub-Saharan countries of Africa, underscore the need to embark on agricultural practices that are climate smart. This study was conducted to provide empirical insights into the on-going debates on how to build a climate change resilience agricultural system for improved productivity and welfare of farmers. Using a nationally representative dataset collected from 2,334 maize-farming households in Nigeria, we examine the impact of credit access on adoption of drought-tolerant maize varieties (DTMVs) among smallholder farmers. The study adopts the linear regression model with endogenous treatment to correct for selectivity bias stemming from both observed and unobserved characteristics. The results show that access to credit significantly increases area of land cultivated under DTMVs. Furthermore, factors including engagement in agriculture as the primary occupation, willingness to risk adopting new maize varieties, and training on improved farming practices have significant positive impacts on the area of land cultivated to DTMVs. Policy measures targeted at providing farmers with access to both formal and informal credit facilities may enhance the adoption of climate-smart technologies.