Effects of village savings and loan association on agricultural value productivity in Northern Region of Ghana

Peter Dawuni, Franklin Nantui Mabe and Osman Damba Tahidu

Agricultural Finance Review, 2021, vol. 81, issue 5, 657-674

Abstract: Purpose - Agriculture in Ghana is dominated by smallholder farmers in rural areas. Majority of these farmers are resource-poor and faced with serious challenges in accessing formal financial services towards farming needs attributed to the stringent requirements. To bridge this gap, village savings and loan associations (VSLA) have been promoted in rural areas as an alternative to meeting the credit needs of smallholder farmers. Credit plays a vital role in input acquisition among farmers for improved agricultural value productivity. This study assesses the contribution of VSLA to agricultural value productivity in the Northern Region of Ghana. Design/methodology/approach - The methodology is a primary cross-sectional data collected with the help of a semi-structured questionnaire. This study, therefore, applied a propensity score matching (PSM) to assess the effects of VSLA on agricultural value productivity. Findings - Results from the PSM revealed that extension contact, contract farming, television set ownership, participating in “Planting for Food and Jobs” and nature of roads, including receiving VSLA information from members' increases participation decision of farmers in VSLA. Conversely, age of a farmer, household size, distance to output market and farmers in the Sagnarigu Municipality have negatively influenced VSLA participation. The propensity score matching estimates showed that members of VSLA obtained 38.2% higher agricultural value productivity than non-members. Originality/value - Village savings and loans associations can be promoted among smallholder farmers as an effective alternative to formal financial service for inclusive development.

Keywords: Agricultural value productivity; Village savings and loans associations (VSLA); Credit; Propensity score matching (PSM); Smallholder farmers; Northern region; Ghana (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:afrpps:afr-02-2020-0024

DOI: 10.1108/AFR-02-2020-0024

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