Financial Innovation and Poverty Reduction: Evidence from Northern Nigeria

Type Journal Article - African Microfinance Week
Title Financial Innovation and Poverty Reduction: Evidence from Northern Nigeria
Publication (Day/Month/Year) 2016
Page numbers 9-29
There is strong evidence that access to financial services
would strengthen the resilience of households to climate
change. Whether such services would lead to a reduction in
poverty is, however, not clearly established. In a post 2015
sustainable development agenda, where the eradication of
poverty for all is a target, empirical evidence on how traditional
financial coping strategies (access to formal credit and crop
insurance) faired in bringing about poverty reduction remains
critical. While attention was given to how these strategies
affected the poorest income quintile among rural farm households
in a developing country in West Africa, we did not fail to
examine the effect of their organisation into savings clubs and
how it helps to reduce poverty. Our analysis of policy options
showed that lending to rural farm households organized into
savings clubs and scaling up access to formal credit would
benefit the poorest income quintile. Traditional crop insurance,
however, was found to benefit only farmers in the richest
income quintile. To eradicate poverty for all in a post 2015
sustainable development framework, perhaps it is time to look
into how rural farm households are organized in developing
countries in order to see how to help them cope or adapt to
covariate and idiosyncratic agricultural shocks. Also, helping
developing country governments to move away from traditional
crop insurance would also be nice.

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