Effect of Financial Risk Management Practices on the Financial Performance of Agricultural Value Chain SMEs in Kwara State, Nigeria

This study examines the effect of financial risk management practices on the financial performance of agricultural value chain SMEs in Kwara State, Nigeria. The study specifically investigates the influence of risk assessment and planning, working capital management, financial analysis and performance monitoring, and credit risk management on SME financial performance. A quantitative cross-sectional survey design was adopted, and primary data were collected through structured questionnaires administered to owners and managers of agricultural SMEs. From a population of 839 registered agricultural SMEs, a sample size of 271 respondents was determined using the Yamane sampling formula. Descriptive statistics, and Ordered Logistic Regression were employed to analyze the data. The findings reveal that credit risk management has a positive and statistically significant effect on the financial performance of agricultural SMEs, while risk assessment and planning, working capital management, and financial analysis and performance monitoring show statistically insignificant effects. The result further indicates that effective credit risk management enhances SME financial performance by improving credit evaluation, reducing default risks, and strengthening financial decision-making. The study concludes that although financial risk management practices are important for business sustainability, credit risk management plays the most critical role in improving financial performance among agricultural value chain SMEs. The study therefore recommends strengthening credit risk assessment systems, expanding access to responsible agricultural financing, and providing financial management training for SME operators to improve risk management capabilities and enhance financial performance.