Farmers’ exposure to climate change in Rural Northern Nigeria: Effect of Financial Inclusion as Adaptation Strategy

Abstract

Most households in Rural Northern Nigeria are engaged in farming hence exposed to the vagaries of Climate Change. This study examines the exposure of rural farm households to climate change in rural northern Nigeria and the effect of financial inclusive services as an adaptation strategy. It also examines whether or not, the poorest income quintile would benefit the most from programmes aimed at increasing access to financial services as a Climate Change adaptation strategy in selected rural communities of Northern Nigeria. Questionnaires were administered to 320 respondents in two rural communities (Rijau and Fakai). Descriptive analysis show that rural farm households are affected by Climate Change through increased temperature, prolonged dry season, floods and drought which leads to low post harvest and in turn, low income. Unfortunately, 96% of those seeking access to finance to mitigate these impacts are unable to do so due to financial exclusiveness. To identify appropriate financial service that would enable the rural households adapt, results from the ordered logit model showed that access to financial services, using formal financial institutions and farmers’ savings clubs, have a positive effect on vulnerable farmers, mostly women. Although, evidence from the scenario analysis showed that increasing access to credit to low income farmers would benefit the bottom 20%, it was not so for the scenario with traditional crop insurance policy. The study concludes that reforms by the Central Bank of Nigeria necessitating microfinance institutions to refocus their products/services to those who need them the most, using group arrangements, would: (1) enhance access to financial resources, (2) enable farmers build resilience to climate change, (3) keep rural households in the farming business, and (4) contribute to actualizing the decisions reached in UNFCCC Conference of Parties (COP) 21 Section 55 Subsection (b) paragraph (ii) which seeks to identify initiatives that would better deliver microfinance to poor farmers as a Climate Change adaptation strategy.