African Journal of
Agricultural Research

  • Abbreviation: Afr. J. Agric. Res.
  • Language: English
  • ISSN: 1991-637X
  • DOI: 10.5897/AJAR
  • Start Year: 2006
  • Published Articles: 6688

Full Length Research Paper

A review of microfinance banks’ effects on smallholder development in Nigeria

Oluwamayokun A. Fadeyi
  • Oluwamayokun A. Fadeyi
  • School of Agriculture and Food Sciences, The University of Queensland, Australia.
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Busayo V. Omojeso
  • Busayo V. Omojeso
  • Department of Agricultural and Applied Economics, University of Wyoming, USA.
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Igbax S. Ityokumbul
  • Igbax S. Ityokumbul
  • Department of Mechanical Engineering, Tennessee Technological University, USA
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  •  Received: 12 July 2021
  •  Accepted: 20 August 2021
  •  Published: 30 September 2021

Abstract

The inauguration of Microfinance Banks (MFBs) in Nigeria in 2007 by the federal government was to provide finance to the low-income poor rural entrepreneurs, which is inclusive of the smallholder farmers located in rural areas that are often excluded from conventional banks’ financing. This paper systematically reviewed literature between January 2007 and April 2019 from the Web of Science and Scopus databases on the impact of MFBs on the development of smallholder agriculture in Nigeria. Using the Boolean search terms of (microfinance bank*), followed by (microfinance bank* AND farm*), then (microfinance bank* AND farm* AND Nigeria*), ten articles were identified.  After eliminating duplicates, five articles were left. The articles were analysed using the VOS viewer, which generated three clusters with 14 terms, 60 links and total link strength of 90. The clusters are (i.) farmer; (ii.) credit; and (iii.) microfinance bank. This review found out that MFBs positively impacted the development of smallholder agriculture in Nigeria. However, constraints such as farmers’ location, level of awareness, interest rate, credit rationing and corruption among the MFB official constitutes setbacks in the availability and accessibility of credit. It is recommended that the governing body – the Central Bank of Nigeria and concerned microfinance banks, put more regulations in place to address these constraints. Also, more scientific study on the impact of MFB in smallholder agricultural development needs to be carried out.

Key words: Agricultural development, agricultural finance, microfinance banks, Nigeria, rural development, smallholders farmers, thematic analysis, VOS viewer.