IDENTIFYING FACTORS THAT INFLUENCE SMALL-SCALE FARMERS’ ACCESS TO CREDIT FROM COMMERCIAL BANKS IN GREATER TAUNG MUNICIPALITY, NORTH WEST PROVINCE, SOUTH AFRICA
The purpose of this study was to identify factors that influence access to formal bank credit by small-scale farmers in the Greater Taung Municipality area. Understanding factors that determine access to formal credit should help improve productivity, food security and contribute to GDP (Gross Domestic Production). A structured questionnaire was used to sample 110 farmers from a total of 280 using a simple random approach. SPSS and Logistic regression were employed to analyse data. The findings revealed that, as the odds of credit need increases by one unit, access to formal credit increases more than 4 times and a similar explanation pertains to land ownership. Also, the perception towards risks, distance between lender and borrower, loan repayment and access to extension advice increase by 1 unit while there were progressive decreases in the odds for the actual need to access credit. All factors except land ownership was found to contribute significantly to access to credit in the study area. There is a need to establish loans offices closer to farms and operated by officers who understand farmers’ challenges within the area in order to simplify lending procedures and improve their perception towards formal credit.
Chauke, P.K. & Anim F.D.K. 2013. Predicting Access to Credit By Smallholder Irrigation Farmers: A Logistic Regression Approach. Journal of human ecology 42:3 195-202
Department of Agriculture, Fisheries and Forestry (DAFF), 2012. A framework for the development of smallholder farmers through cooperatives development. Directorate Co-operative and Enterprise Development
DUBE, L., MARIGA, T. & MREMA, M. 2015. Determinants of Access to Formal Credit by Smallholder Tobacco Farmers in Makoni District, Zimbabwe. Greener Journal of Agricultural Sciences. 5 (1): 34-42.
FREEMAN, H.A., EHUI, S.K. & MOHAMMAD A.J. 1998. Credit constraints and smallholder dairy production in the East African Highlands: Application of a switching regression model. J. Agric. Econ. 19:33-44.
INGANGA, B.W., NJERU, A., OMBUI, K. & ONDABU, I.T 2014. Factors affecting Customer Demand of Financial Services Offered by Commercial Banks in Nairobi county. Int. J. Sci. Res. Pub. 4(11):1-25.
KARANJA, J.G., MWANGI, A.K. & NGIGI, N.S. (2014). Analysis of factors influencing access to credit services by women entrepreneurs in Kenya. Res. J. Fin. Account. 5(11):34-41.
KIPLIMO, J.C., NGENOH, E., KOECH. W. & BETT, J. 2015. Determinants of Access to Credit Financial Services by Smallholder Farmers in Kenya. Journal of Development and Agricultural Economics 7(9): 303-313
KIRSTEN, J.F. & VAN ZYL, J. 1998. Definition of small scale farmers in the South African context. South Africa. Agrekon, Vol 37, No 4:555.
KOMICHA, H.H. & ÖHLMER B.O. 2007. Influence of Credit Constraint on Technical Efficiency of Farm Households in Southeastern Ethiopia. International Conference on African Development Archives. Paper 125. http://scholarworks.wmich.edu/africancenter_icad_archive/125 (Accessed 15 January 2016)
ODENDO, M., DE GROOTE, H., ODONGO, O. & OUCHO, P. 2002. Participatory Rural Appraisal of Farmers’ Maize Selection Criteria and Perceived Production Constraints in the Moist Mid-altitude Zone of Kenya.IRMA Socio-Economic Working Paper No.02-01. CIMMYT and KARI, Nairobi.
OLAGUNJU, F.I. & AJIBOYE, A. 2010. “Agricultural Lending Decision: A Tobit Regression Analysis.” African Journal of Food Agricultural Nutrition and Development. 10 (5).
ORTMAN, G.F. & KING, R.P. 2010. Research on agri-food supply chains in Southern Africa involving small scale farmers: Current status and future possibilities. Agrekon, 49: 397-417.
READ. 2015. Department of Rural Environmental Agricultural development, annual provincial report, www.nwpg.gov.za, (accessed 2 January 2016).
WOOLDRIDGE, A. 2002. The Role of Financial and Business Development Services (BDS) in Micro and Small Enterprise (MSE) Development in Ethiopia. Addis Ababa: Associations of Ethiopian Microfinance Institutions.
WORLD BANK. 2014. “Promoting Opportunity, Growth, and Prosperity” The Challenge of Growth with Inclusion, The World Bank annual report, www.worldbank.org/annual reports, (11 December 2015)
This journal permits and encourages authors to post items submitted to the journal on personal websites or institutional repositories both prior to and after publication, while providing bibliographic details that credit, if applicable, its publication in this journal.