Credit Access and Constraints to Livelihood Diversification among Rural Farmers in Kano State, Nigeria

Abstract

Credit access is a critical enabler of livelihood diversification among rural households, particularly in resource-constrained and climate-vulnerable regions like northern Nigeria. This study examined the extent of credit access, major constraints, and their influence on livelihood diversification among 450 smallholder farmers in Kano State, Nigeria. Data were collected through a multistage sampling procedure and analyzed using descriptive statistics, binary logit regression, and the Simpson Diversification Index. Results revealed that respondents were predominantly male (81.1%), married, and middle-aged, with small landholdings and low monthly incomes. Farming remained the dominant livelihood activity, supplemented by livestock, poultry, and petty trading. Formal credit access was limited (31.8%), with most households relying on informal sources such as friends and relatives. The primary constraints to diversification were limited access to credit, high startup costs, and high input prices. Binary logit and other regression analyses confirmed that financial exclusion significantly hinders diversification efforts. The study concludes that financial exclusion remains the main structural barrier to livelihood diversification. It recommends expanded rural credit delivery, reduced borrowing costs, strengthened cooperative financing, and enterprise support programs to enhance household resilience and welfare in Kano State.