An analysis of factors that influence access to formal credit by smallholder farmers in Zimbabwe: Evidence from Masvingo Rural District.

Abstract

The main objective of the study was to examine the factors that influence access to formal credit by smallholder farmers in Masvingo Rural District. Using judgment sampling procedure, self-administered questionnaires were used to interview 115 smallholder farmers to obtain primary data. The data presentation and analysis were done using both descriptive statistics and multinomial logit model. Using the marginal effects for multinomial logit model, collateral security, bank account ownership, access to credit information, gender and education were found to positively influence access to formal credit by smallholder farmers. The study recommends the government to consider forming strategic partnerships with smallholder farmers to offer loans with less stringent collateral requirements. Formal financial institutions are also advised to lend to females. As well, females are encouraged to apply for formal credit. Programs to disseminate information and to educate and train smallholder farmers should be organised by government and formal financial institutions.