Bridging credit gaps for sustainable agriculture: The role of rural savings and credit cooperatives among smallholder farmers

Gershom Endelani Mwalupaso, Shangao Wang, Xianhui Geng and Shadrack Kipkogei
Additional contact information
Gershom Endelani Mwalupaso: College of Economics and Management, Nanjing Agricultural University, Nanjing, P.R. China
Shangao Wang: School of Management, Nanjing University of Posts and Telecommunications, Nanjing, P.R. China
Xianhui Geng: College of Economics and Management, Nanjing Agricultural University, Nanjing, P.R. China
Shadrack Kipkogei: College of Economics and Management, Nanjing Agricultural University, Nanjing, P.R. China

Agricultural Economics, 2025, vol. 71, issue 5, 254-272

Abstract: Despite the recognised benefits of climate smart agriculture (CSA) in enhancing farmers' adaptive capacity to climate risks, adoption rates remain low in Sub-Saharan Africa. This disparity can be attributed, in part, to the significant challenges smallholder farmers face in accessing credit from the formal financial sector. In response, Rural Saving and Credit Cooperatives (RUSACCOs) have emerged as crucial sources of funding for both household expenses and agricultural activities. However, despite their increasing importance in improving financial inclusion, little is known about whether participation in RUSACCOs can help alleviate existing credit constraints and promote the adoption of CSA among smallholder farmers. To address this knowledge gap, we employ a recursive bivariate probit (RBP) and propensity score matching (PSM) analysis using data from 400 randomly selected smallholder farmers in Zambia. The analysis controls for three main sources of endogeneity: program placement, endogenous covariates, and self-selection. Our findings indicate that participation in RUSACCOs has the potential to mitigate farmers' credit constraints by 42% and facilitate CSA adoption by 25%. Notably, the alleviation of existing credit constraints is associated with a 14% increase in CSA adoption. These results underscore the previously overlooked role of RUSACCOs in promoting agricultural sustainability. By effectively addressing financial inclusion barriers and providing access to practical agricultural knowledge, RUSACCOs can contribute to reducing the vulnerability of agriculture while fostering sustainable production. Our study suggests that repurposing RUSACCOs to emphasise financial inclusion and promote access to agricultural learning platforms can yield triple benefits: agricultural, environmental, and livelihood sustainability.

Keywords: climate-smart agriculture; credit constraints; financial inclusion; rural development; sustainable intensification; Zambia (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://agricecon.agriculturejournals.cz/doi/10.17221/436/2024-AGRICECON.html (text/html)
http://agricecon.agriculturejournals.cz/doi/10.17221/436/2024-AGRICECON.pdf (application/pdf)
free of charge

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:71:y:2025:i:5:id:436-2024-agricecon

DOI: 10.17221/436/2024-AGRICECON

Access Statistics for this article

Agricultural Economics is currently edited by Ing. Zdeňka Náglová Ph.D.

More articles in Agricultural Economics from Czech Academy of Agricultural Sciences
Bibliographic data for series maintained by Ivo Andrle ().