The role of formal credit in enhancing maize production and profitability in Africa: empirical evidence from Ghana

Amos Mensah (), Faizal Adams, Samuel Owusu Afriyie, Prince Asiedu, Vashti Owusu-Nkwantabisah, Stephen Prah, Awuah Michael and Malik Atahwu Rahaman
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Amos Mensah: Kwame Nkrumah University of Science and Technology
Faizal Adams: Kwame Nkrumah University of Science and Technology
Samuel Owusu Afriyie: Park University College of Management
Prince Asiedu: University of Passau
Vashti Owusu-Nkwantabisah: CSIR-Crops Research Institute
Stephen Prah: North Carolina A&T State University
Awuah Michael: Kwame Nkrumah University of Science and Technology
Malik Atahwu Rahaman: Kwame Nkrumah University of Science and Technology

Review of Agricultural, Food and Environmental Studies, 2025, vol. 106, issue 2, No 4, 259-291

Abstract: Abstract This study investigates the role of formal credit access in enhancing maize production and profitability in Ghana, focusing on its impacts on farm output, profitability, and regional disparities, while identifying the determinants of credit access. Survey data from maize farmers across Ghana were analyzed using regression models to evaluate the effects of formal credit on output, revenue, gross margin, and return on investment. Farmer perceptions of credit access and regional disparities in its impact were also assessed. The study finds that formal credit access significantly enhances maize productivity and profitability. However, in Northern Ghana, credit alone does not substantially improve profitability due to weak infrastructure and limited farmer support systems. Addressing these challenges requires strengthening Farmer-Based Organizations (FBOs), improving rural infrastructure, and implementing financial literacy programs. The study is limited to formal credit sources, potentially overlooking the role of informal credit channels, such as loans from family, friends, or moneylenders, which are also significant in Ghana’s farming communities. Future research should incorporate both formal and informal credit sources to provide a more comprehensive understanding of credit’s role in improving farm performance. Expanding formal credit access and addressing regional disparities through targeted interventions can optimize credit utilization and enhance maize production. Policymakers and development practitioners should focus on strengthening rural financial systems, infrastructure, and farmer support networks. Improved access to formal credit and supporting systems can reduce regional inequalities in agricultural productivity, contributing to food security, poverty reduction, and equitable rural development in Ghana. This study provides empirical evidence on the regional disparities in the impact of formal credit on maize production and profitability in Ghana. It offers actionable recommendations for optimizing credit utilization to promote sustainable agricultural growth.

Keywords: Formal credit access; Maize production; Profitability; Regional disparities; Agricultural policy (search for similar items in EconPapers)
JEL-codes: D14 G21 O13 Q14 Q18 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s41130-025-00235-2

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