Socio-Economic Determinants of Smallholder Farmers’ Access to Credit in Ondo State, Nigeria: Evidence from a Heckman Selection Model

Abstract

Limited access to agricultural credit continues to limit the productivity of smallholder farmers in Nigeria, despite the sector’s vital role in food security and rural livelihood development. This study examined the socio-economic factors influencing access to credit among smallholder farmers in Ondo State, Nigeria. Specifically, the study described farmers’ socio-economic characteristics, and identified the key factors affecting access to credit facilities. A multistage sampling technique was used to select 240 smallholder farmers from nine farming communities across the three agricultural zones of the state. Primary data were collected through semi-structured questionnaires complemented with oral interviews. Descriptive statistics were employed to analyze farmers’ socio-economic characteristics, while Pearson Product-Moment Correlation, and the Heckman Two-Step Regression Model were applied to examine the determinants of credit access and to address possible sample selection bias. The findings showed that most farmers were within the economically active age group, and a large proportion were married with at least a basic education. Cooperative membership and regular contact with extension agents were common among respondents. The results show that level of education (p = 0.028) and cooperative membership (p = 0.051) significantly influence farmers’ access to credit. Furthermore, the Heckman selection model revealed that age (p < 0.01), farm size (p < 0.01), education (p < 0.01), access to collateral (p < 0.01), cooperative membership (p < 0.05), and extension training on credit (p < 0.01) significantly affect the likelihood of accessing credit. However, small farm size, gender-related constraints, and limited capital base reduced access to formal credit. The study concludes that socio-economic characteristics play a major role in shaping smallholder farmers’ participation in rural credit schemes. It therefore emphasizes the need to strengthen cooperative societies, expand extension services, and promote inclusive and gender-sensitive credit policies to enhance agricultural financing and rural livelihoods in Ondo State.