DETERMINANTS OF FARMERS' DECISION TO ACCESS CREDIT: THE CASE OF ZIMBABWE

Shallone K Chitungo,Simon Munongo

doi:10.18551/rjoas.2013-05.02

Abstract

In developing countries, improvement in productivity through investment in productive ventures, especially in the agricultural sector where majority of the population derive their livelihood is necessary for accelerated economic growth. In this study we look at the determinants of rural households' decision on credit. The study used random sampling of 20-30 farm households from each district and 97 families responded to the questionnaire. The study concluded that the type of crop, household size and gender of household head positively affected the decision by households to borrow while age squared negatively affects decision to borrow.

Highlights

Improvement in productivity through investment in productive ventures, especially in the agricultural sector where majority of the population derive their livelihood is necessary for accelerated economic growth (Awunyo-Vitor 2012)
According to Nwaru (2004): Agricultural credit is the present and temporary transfer of purchasing power from a person who owns it to a person who wants it, allowing the later the opportunity to command another person’s capital for agricultural purposes but with confidence in his willingness and ability to repay at a specified future date
Agricultural household models suggest that farm credit is necessitated by the limitations of self-finance, and by uncertainty pertaining to the level of output and the time lag between inputs and output (Kohansal and Mansoori, 2009)

Summary

Introduction

Improvement in productivity through investment in productive ventures, especially in the agricultural sector where majority of the population derive their livelihood is necessary for accelerated economic growth (Awunyo-Vitor 2012). In order to increase agricultural productivity especially among the rural poor and to assist rural households in maintaining food security, many NGOs and private companies in Zimbabwe and in other developing countries initiated credit programmes including contract farming with the idea that rural smallholder farmers will have access to formal sources of credit and improve their welfare (Munongo 2012).

Results

Conclusion