Access to Bank Loans and Smallholder Farmers' Paddy Productivity; A case of Mvomero District, Tanzania

Faraja N. Mpeku and Justin K. Urassa
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Faraja N. Mpeku: Department of Policy Planning and Management, Sokoine University of Agriculture, P. O. Box 3035, Morogoro, Tanzania.
Justin K. Urassa: Department of Policy Planning and Management, Sokoine University of Agriculture, P. O. Box 3035, Morogoro, Tanzania.

International Journal of Science and Business, 2022, vol. 15, issue 1, 65-78

Abstract: Limited access to credit is one of the main limitations facing smallholders in Africa. Therefore, the study on which this paper is based, aimed at comparing smallholder farmers’ paddy productivity before and after their access to loans from formal financial institutions. The study adopted a cross-sectional research design whereby data were collected once from 110 smallholder paddy farmers in Mvomero District using a questionnaire. In addition, key informant interviews and focus group discussions were conducted to enable triangulation. Quantitative data from the questionnaire were analyzed using SPSS whereby both descriptive and inferential statistics were determined. Study findings show that the paddy crop continues to play an essential role in the majority of households in the study area. Paddy productivity, on the other hand, was relatively low. The results from the linear regression show that loan size, age of household, farm size, the use of fertilizer and farming experience were significantly associated with paddy productivity. They further show that the major challenges faced by smallholder farmers in their access to bank loans were high-interest rates, loan inadequacy, and high collateral demand. The results of the paired sample t-test show that there is a difference in productivity before and after farmers accessed bank loans. Despite the importance of paddy farming to household livelihoods, it was reported that access to credit has a positive impact on the productivity of paddy farmers.

Keywords: Paired sampled t-test; Productivity; Smallholder farmers; Credit; Paddy (search for similar items in EconPapers)
Date: 2022
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