Interceding role of village saving groups on the welfare impact of agricultural technology adoption in the Upper East Region, Ghana

Abstract

For most developing countries like Ghana, the adoption of productive agricultural technologies in the quest to achieve food security and improve farmers' welfare cannot be overemphasized. Hence, interventions that have the potential to enhance the impact of the adoption of these technologies are critical for development planning and policy. This study investigates whether or not village saving groups enhance the welfare impact of agricultural technology adoption using farm-level data collected from the Garu and Tempane districts in the Upper East Region, Ghana. We applied an instrumental variable regression model that incorporates an endogenous interaction term to estimate the interceding role of village saving groups on the welfare impact of agricultural technology adoption. The empirical results reveal that participation in village savings groups further enhances the welfare impact of agricultural technology adoption (proxy by Zai technology). The factors that influence farmer's participation in village saving groups include the number of extension contacts, membership of farmer-based organizations (FBOs) and access to farm credit. Other factors such as the age of the farmer, household size and years of education were also found to influence farmers' decisions to adopt Zai technology. The study recommends the promotion of village saving groups as they build rural farmers' capacity to save for farm investment, which further enhances their adoption of agrarian technology in the quest to improve farmers' welfare. Moreover, policy instruments like the revitalization of extension services, the formation of FBOs, and access to farm credits should be strengthened in this pursuit.