EFFECTS OF FINANCIAL CAPITAL ON FOOD SECURITY AMONG CASSAVA PROCESSORS IN OYO AND OGUN STATES, NIGERIA

Financial capital, captured in this study as formal and informal, has been identified as one of the major resources for the development of the agricultural and processing sectors.  Its traditional role in covering the financial gap for farmers and processors for increased productivity cannot be overemphasized and this provides the base for this study. Inadequate financial capabilities of the processors have overtime led to insufficient access to processing inputs and this has negative impact on the processors’ food security status. This paper assesses the effects of financial capital on food security, using a proportionate sample of 540 small scale cassava processors collected in Oyo and Ogun states, Nigeria. Econometric tools, techniques and indices used included the food security index and endogenous switching regression. The study found significant differences in the socioeconomic variables of the two processing groups of financial capital users, the more experienced and educated the processors were, the more likely they used formal financial capital?. In addition, the choice of formal financial capital tends to significantly improve the processors’ food security by 4.37% when compared to informal financial capital users, most especially it was effective at improving this outcome for more educated and experienced processing households. Hence, education and experience should be critical factors in formulating policies that will promote and ensure the appropriate use of financial capital among cassava processors.