Impact of Micro Credit on Rural Farming Activities: The Case of Farming Communities Within Sunyani Area

Abstract

Most MFIs especially rural banks have performed creditably well in their operations and have contributed a lot towards agricultural development. The study seeks to investigate the impact of micro credit on farming activities but specifically to determine the impact of micro credit on labour employed, working capital, output and income of farmers and other forms of support rural banks give to farmers. A total of 103 farmers were randomly selected from farmer clients of a rural bank to respond to close-ended questions. Paired samples t-test was run to determine the differences and impact of the credit intervention on the four dependent variables. A modified Eta squared formula and paired samples correlation were used to determine the impact of the independent on the dependent variables. The result found significantly large effect of the micro credit intervention on the labour employed, working capital, output and income of farmers. All the dependent variables had increased during the period under study although all the increases cannot be attributed to the credit intervention only. Apart from the credit, other forms of support given to farmers include improved and subsidized farm inputs like fertilizer, seedlings and other inputs.