Agricultural productivity, credit and farm size nexus in Africa: a case study of Ghana

Abstract

Purpose– The purpose of this paper is to examine the connections of agricultural productivity, access to credit and farm size in Africa using Ghana as a case study.Design/methodology/approach– The paper employs mixed methods – quantitative and qualitative strategies for data collection and analyses. The hierarchical competitive model was used for the quantitative analyses supplemented with qualitative analyses using key informant interviews, focus group discussions and household case studies.Findings– The results show that there is significant relationship between credit from formal and informal sources and agricultural productivity. Thus access to formal and informal credit increases farm household agricultural productivity by about 0.10 (p=0.05) and 0.45 (p< 0.01), respectively. The quadratic terms of formal and informal credit as well as farm size were found to significantly influence agricultural productivity. The implication of this is that the relationships between formal credit, informal credit and farm size on one hand and agricultural productivity on the other are non-linear in nature. The interactions of formal credit with informal credit; informal credit with farm size; and formal and informal credit with farm size have significant relationships with agricultural productivity. The amount of remittance received by farm households has negative and insignificant influence on agricultural productivity. Market access is also an insignificant determinant of agricultural productivity in Ghana.Originality/value– This paper provides new insights on whether the scale of production (farm size as proxy) and access to financial services (credit as a proxy) matter in promoting agricultural productivity in Africa using Ghana as a case study. Thus the paper is of relevance to policy-makers and practitioners in Africa and Ghana in particular who are seeking to make informed policy decisions on effectively incorporating credit provision into the agricultural transformation agenda of the continent.