Dube et al
Greener Journal of Agricultural Sciences Vol. 5 (1), pp. 034-042, February 2015.
Manuscript Number: 011515003
Determinants of Access to Formal Credit by Smallholder Tobacco Farmers in Makoni District, Zimbabwe
Lighton Dube1*, Tatenda Mariga2 and May Mrema2
1Faculty of Commerce and Law, Zimbabwe Open University, National Office, P.O Box MP 111, Mt Pleasant, Harare, Zimbabwe
2Faculty of Agriculture and Natural Resources, Africa University, P. O. Box 1320, Mutare, Zimbabwe
*Corresponding Author’s Email: dubelig@ gmail.com
This study used data from 77 smallholder tobacco farmers from Makoni district in Zimbabwe to investigate factors affecting smallholder tobacco farmers’ access to formal credit. The results of the study showed that contact with extension services, farmer’s attitude towards risk of borrowing and ownership of land cultivated significantly and positively influenced the probability of farmers’ access to formal credit in the study area. These findings confirm that improving access to extension services and secure land ownership remain the important factors in the quest to improving access of smallholder farmers to formal credit in Zimbabwe. Improved access to information on credit use through extension services is also likely to positively influence farmers’ perceptions on credit risk, which would in turn reduce fears associated with formal credit sources. Encouraging farmers to insure both their crop and loans against the event of crop failure can also be used to reduce the risk associated with formal credit sources and help improve access to formal credit by a majority of smallholder farmers.
Key Words: Smallholder tobacco farmers, formal credit, Makoni district, logit model.
Abdalla, E. M. and Ebaidalla, E. M. (2012). Determinants of small farmer’s access to formal credit institutions in Kassala state, East Sudan. University of Kassala Journal, First Issue, April 2012.
Amjad. S and Hasnu SAF (2007). Smallholders’ access to rural credit: Evidence from Pakistan. The Labore Journal of economics. Vol. 12(2): 1-25
Binswanger, H., Khandker, S. and Rosenzweig, M. (1989). How infrastructure and financial institutions affect agricultural output and investment in India. World Bank, Washington D. C. World Bank Working Paper No. 163.
Delgado, C. L. (1995). Africa’s changing agricultural development strategies: Past and present paradigms as a guide to the future. International Food Policy Research Institution, Washington D. C. Agriculture, and the Environment Discussion Paper 3.
Diagne, A. (1999). Determinants of households’ access to and participation in formal and informal credit market in Malawi. International Food Policy Research Institution, Washington D. C. FCND Discussion Paper No. 67
Diagne, A. and Zeller, M. (2001). Access to credit and its impact on welfare in Malawi. International Food Policy Research Institute, Washington D. C. Research report 116
Doan, T., Gibson, J. and Holmes, M. (2010). What determines credit participation and credit constraints of the poor in peri-urban areas, Vietnam? MPRA Paper No. 27509.
Duy, V. Q. (2011). Factors affecting on Access to formal credit of households in the Mekong delta, Vietnam. School of Economics and Business Administration, Can Tho University, Vietnam
Duy, V. Q. (2012). Determinants of household access to formal credit in the rural areas of the Mekong Delta, Vietnam. MPRA Paper No. 38202
Fletschner, D. and Kenney, L. (2011). Rural Women’s Access to Financial Services Credit, Savings and Insurance. ESA working paper No. 11-07. The Food and Agriculture Organization of the United Nations, 2010-2011.
Greene, W.H. (2008). Econometric Analysis, 6th Edition, Upper Saddle River, New Jersey, Prentice-Hall, New York University.
Hosmer, D.W., & Lemeshow, S. (2000). Applied Logistic Regression. Second Edition. A Wiley-Inter science Publication. New York.
Hossain, M. (1988). Credit for the Alleviation of Rural Poverty: The Grameen Bank in Bangladesh. IFPRI Research Report No. 65.
Komicha, H. H. (2007). Farm Household Economic Behaviour in Imperfect Financial Markets: Empirical Evidence and Policy Implications on Saving, Credit and Production Efficiency in Southeastern Ethiopia. Doctoral Thesis, Swedish University of Agricultural Sciences, Uppsala.
Komicha, H. H. and Öhlmer, Bo (2007). Influence of Credit Constraint on Technical Efficiency of Farm Households in Southeastern Ethiopia. International Conference on African Development Archives. Paper 125. http://scholarworks.wmich.edu/africancenter_icad_archive/125
Long, S.T., and Freese, J. (2006). Regression Model for Categorical Dependent Variables Using STATA. Texas: A Stata Press Publication, College Station.
Miller, C. J. and Ladman, J. R. (1983) Factors Impeding Credit Use in Small Farm Households in Bolivia. The Journal of Development Studies, 19(4): 523.
Mohieldin, S. and Wright, W. (2000). Formal and Informal Credit Markets in Egypt. Economic Research Forum, Working Paper No. 9415.
Oboh, V. U. and Ekpebu, I. D. (2010). Determinants of formal agricultural credit allocation to the farm sector by arable crop farmers in Benue State, Nigeria. African Journal of Agricultural Research, Vol. 6(1):181-185
Okurut, F. N. (2001). Access to Credit by the Poor in South Africa: Evidence from Household Survey Data 1995 and 2000. Stellenbosch Economic Working Papers: 13/06\
Sarap, K. (2000). Factors Affecting Small Farmers’ Access to Institutional Credit in Rural Orissa, India. Development and Change, Vol. 21(2): 281-307
Tang, S., Guan, Z. and Jin, S. (2010). Formal and Informal Credit Markets and Rural Credit Demand in China. Paper presented at Agricultural & Applied Economics Association 2010 AAEA,CAES, & WAEA Joint Annual Meeting, Denver, Colorado, July 25-27, 2010
TIMB (2011). Reviewing the Industry for Sustainable Growth. TIMB National Tobacco Workshop Report:
Yehuala, S. (2008). Determinants of Smallholder Farmers Access to Formal Credit: The Case of Metema Woreda, North Gonder, Ethiopia. M.Sc. Thesis, Haramaya University, Ethiopia.
Zeller, M. (1994). Determinants of Credit Rationing: A Study of Informal Lenders and Formal Credit Groups in Madagascar. World Development, Vol. 22 No. 12: 1895 – 1907
Zeller, M. and Sharma, M. (1998). Rural Finance and Poverty Alleviation. Food Policy Report, IFPRI, Washington D.C.
Zeller, M., G. Schrieder, J. von Braun & Heidhues, F. 1997. Rural Finance for Food Security for the Poor: Implications for Policy and Research. Food Policy Review No. 4. Washington, D.C.: International Food Policy Research Institute (IFPRI).
ZFU (2011). Experience Theme: Reviewing the Industry for Sustainable Growth. ZFU workshop report.
Cite this Article: Lighton D, Tatenda M, May M, 2015. Determinants of Access to Formal Credit by Smallholder Tobacco Farmers in Makoni District, Zimbabwe. Greener Journal of Agricultural Sciences, 5(1):033-042, http://doi.org/10.15580/GJAS.2015.1.011515003.
Call for Articles/Books
Call for Scholarly Articles
Authors from around the world are invited to send scholary articles that suits the scope of this journal. The journal is currently open to submissions and will process and publish articles daily, immediately they are ready.
The journal is centered on quality and goes about its processes in a very timely fashion. Seasoned editors/reviewers will be consulted to review each article(s), profer quality evaluations and polish the articles with expertise before publication.
Use our quick submit button to submit or simply send your article(s) as an e-mail attachment to email@example.com or firstname.lastname@example.org.
Call for Books
You are also invited to submit your books for online or print publication. We publish books related to all academic subject areas. Submit as an e-mail attachment to email@example.com.