The efficacy of Agricultural Financing on Agricultural Production in Zimbabwe

Lucy Chamba and Mr Ismael Tarirai
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Lucy Chamba: Durban University of Technology
Mr Ismael Tarirai: Midlands State University

African Journal of Commercial Studies, 2024, vol. 5, issue 4

Abstract: This research investigates the effectiveness of agricultural financing in enhancing agricultural production in Zimbabwe. This study explores the key drivers of agricultural production in Zimbabwe and specifically assesses the influence of agricultural loans, foreign direct investment (FDI), and domestic agricultural capital on agricultural output within the country. The study seeks to gain a better understanding of how these financial resources contribute to agricultural output and assesses their overall effectiveness in stimulating agricultural productivity. The study used the Autoregressive Distributed Lag (ARDL) to analyse the short-term and long-term relationship among agricultural output, agricultural loans, foreign direct investment (FDI), and domestic agricultural capital. The findings indicate a robust positive correlation between agricultural loans and agricultural output. Increased access to financing enables farmers to invest in inputs, machinery, and technology, leading to significant boosts in productivity. While FDI has the potential to introduce advanced technologies and capital, the findings suggest a non-significant direct impact on production. However, it may indirectly contribute through improved infrastructure and market access. Additionally, the research confirms a significant positive link between domestic agricultural capital and agricultural production. Sufficient availability of capital, for land improvement, irrigation, and modern techniques, is strongly linked to increased production. The study highlights the critical role of agricultural financing in driving agricultural growth in Zimbabwe. It also emphasizes the need for strategic investments and supportive infrastructure to maximize the benefits of FDI.

Keywords: Agriculture; Finance; FDI; Loan (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:ajocsk:2024-55

DOI: 10.59413/ajocs/v5.i.4.9

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