Challenges, Effects, Coping Strategies, and Measures of Financing Agriculture: Socio-dynamics of Conventional and Islamic Sources of Finance in Kaduna State, Nigeria

Mohammed Shamsidin Ango Abdullahi, Yogesh Kumar Gupta


Kaduna State in Nigeria is a predominantly agricultural society with active farmers within the median age group of between 35- 54 years who are into food crop production with maize as the major food crop and ginger as the major cash crop produced in Kaduna State. Their business activities are spread almost evenly across the geographical zones in Kaduna State. The main aim of this paper is to examine the causal relationships of the effects of the challenges of financing agriculture on the challenges of financing agriculture and also evaluate the effects of the measures to mitigate the challenges of financing agriculture on the coping strategies adopted in financing agriculture in Nigeria. Data were collected using the questionnaire as the instrument of data collection in a quantitative method based on the cluster sampling technique, 663(50%) questionnaires were administered across 17 different clusters across the three (3) geographical zones in Kaduna State and some centralized offices of financial institutions within Abuja and 562 responses were received with a sample error margin of -17.9%. An Ordinary Least Square (OLS) linear regression test conducted revealed the effects of challenges of financing agriculture on the lack of collateral to obtain a loan with a B .820 and managerial/government bureaucracy in financing agriculture coming second with a B .638. Privatization of energy is a major challenge to agro manufacturing and the value chain with B .585 is in third place while lack of finance for mechanization and irrigation technology is in fourth place with B .572. In addition, the study also revealed the impact of the measures on the coping strategies is strongest on Zakat with a B 1.679. The effect of the measure on contribution from family and friends as a coping strategy comes in second place with a B .912. The study also revealed insecurity and infrastructural development as other impediments to financing agriculture in Nigeria based on the explored open-ended question. It is recommended that a central zakat fund be established to provide stable non-interest finance to smallholder farmers.

Keywords: Conventional Finance, Coping Strategy, Insecurity, Income, Islamic Finance, Islamic Development Bank, World Bank, Poverty, Unemployment.

DOI: 10.7176/RJFA/13-24-06

Publication date: December 31st 2022

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