Smallholder farmers' intention to adopt microfinance services in rural areas of Tanzania - a behavioural study

Abstract

In Tanzania, microfinance services aim to assist individuals who are not qualified for conventional banking services to access financial services that are necessary for increasing their work productivity and output. However, response given by smallholder farmers who are the majority of rural population is not encouraging. This study addresses issues that are related to behavioural variables. The probability sampling technique was used to select respondents and the questionnaire survey data were analysed by using structural equation modelling (SEM). The results show that, the following variables perceived benefits, subjective norms, attitude, and perceived behavioural control produce significant positive effects on smallholder farmer's intention to adopt microfinance services. Meanwhile, perceived barriers and behavioural intention have significant negative relationship. The public and private sectors are recommended to arrange more training sessions to enhance respondents' financial knowledge, revise group-lending model to minimise the risk that need to be borne by individual group member, reduce the micro-loan's interest rate, and introduce financial products that can match with rural farmers' needs.