Role of Access to Credit in Rice Production in Sub-Saharan Africa: The Case of Mwea Irrigation Scheme in Kenya

Abstract

This study explores the role of access to credit in improving rice production in Sub-Saharan Africa using the case of rice farmers in the large-scale Mwea irrigation scheme in Kenya. Using household level survey data, we find that the use of fertiliser and paddy yield per hectare are not significantly different among borrowers from the cooperative society, borrowers from rice traders and non-borrowers. However, borrowers from rice traders receive lower incomes and profits compared with non-borrowers largely due to the higher interest charged. Considering that such farmers who borrow from rice traders are generally poorer in financial, physical, and human capital and would have even made lower income and profit without rice trader credit, we suggest policies to facilitate further development of credit markets for both efficiency and equity of rice production in Mwea.