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The Relative Importance of Credit in Agricultural Production in Ghana: Implications for Policy and Practice

M. A. Akudugu

No 277794, 2018 Conference (2nd), August 8-11, Kumasi, Ghana from Ghana Association of Agricultural Economists

Abstract: Empirical literature and policy documents always capture access to credit as one of the most important determinants of successful agricultural production in Ghana and elsewhere in the developing world, particularly Africa. It is often argued that access to credit allows farmers to invest confidently in their agricultural production activities leading to increased productivity, which consequently is able to urge them out of poverty. The extent to which these long held views and narratives are true in modern Ghana is yet to be ascertained. This paper therefore uses mixed methods to ascertain whether or not farmers accord the same level of importance to credit in their agricultural production as being perceived by policy makers, development practitioners and researchers. Thus, the paper analyzed the importance of credit relative to other factors of agricultural production of farm households in Ghana. Multistage sampling was employed in the selection of sub-study areas and research participants across the three main ecological zones (i.e. coastal, forest and savannah) of Ghana. The results indicated that the five most important factors of agricultural production, in the view of farmers are, in descending order, equity finance, technological change, farm implements, credit finance and labor. This result show that in relative terms, access to credit is the fourth most important, which means that its importance has over the years been exaggerated in the empirical literature and by policy makers, implementers and development practitioners. The implication of this is that policies that aim to improve agricultural production and promote transformation of Ghana’s agricultural sector must focus on helping farmers accumulate equity capital, provide them with the requisite technologies and mechanized farm equipment before thinking of credit financing.

Keywords: Agricultural and Food Policy; Agricultural Finance (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr
Date: 2018-08-09
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DOI: 10.22004/ag.econ.277794

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