IDENTIFYING FACTORS THAT INFLUENCE SMALL-SCALE FARMERS’ ACCESS TO CREDIT FROM COMMERCIAL BANKS IN GREATER TAUNG MUNICIPALITY, NORTH WEST PROVINCE, SOUTH AFRICA
Abstract
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.
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