Digital Financial Inclusion, Agricultural Value Chain Financing and Smallholder Farm Productivity: Evidence from Anambra and Imo States, Southeast Nigeria

Abstract

This study investigated the nexus between digital financial inclusion, agricultural value chain financing, and smallholder farm productivity in Anambra and Imo States, Southeast Nigeria. The study addressed persistent constraints in agricultural financing by examining how access to digital financial services enhances value chain financing and improves farm productivity among smallholder farmers. Anchored in Financial Intermediation Theory and the Diffusion of Innovation Theory, the study adopted a cross-sectional survey research design. A target sample of 400 registered smallholder farmers was selected through a multistage sampling procedure across the two states and surveyed using a structured questionnaire, with 387 valid responses (96.8%) retained for analysis. The instrument demonstrated satisfactory internal consistency (Cronbach's α = 0.889–0.912). Data were analysed using descriptive statistics and Partial Least Squares Structural Equation Modelling (PLS-SEM). The findings revealed that digital financial inclusion exerted a significant positive influence on agricultural value chain financing (β = 0.641, p < 0.001), while agricultural value chain financing significantly enhanced smallholder farm productivity (β = 0.472, p < 0.001). Digital financial inclusion also exerted a significant direct effect on smallholder farm productivity (β = 0.298, p < 0.001), and agricultural value chain financing partially mediated the relationship between digital financial inclusion and farm productivity (indirect β = 0.303, p < 0.001). The structural model explained 56.3% of the variance in farm productivity, indicating substantial predictive power. The study concluded that expanding inclusive digital financial ecosystems and strengthening value chain financing mechanisms can substantially improve agricultural productivity and rural livelihoods in Southeast Nigeria. It recommended collaborative investment by financial institutions, agricultural agencies, FinTech providers, and policymakers in digital agricultural finance infrastructure, financial literacy programmes, and innovative credit delivery systems to accelerate sustainable agricultural transformation.