Contribution of village savings and lending associations to improving rice productivity and income in Mvomero district, Morogoro, Tanzania

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Date

2022

Journal Title

Journal ISSN

Volume Title

Publisher

Sokoine University of Agriculture

Abstract

Village savings and lending associations (VSLAs) have proven to overcome the obstacles that exist to informal financial services and are recognized to facilitate access to credit for smallholder rice farmers in rural areas. However, there is not enough information on its impact on rice productivity and income, which is still low despite the effort of the government to make sure smallholder farmers improve their production through the use of recommended inputs. Previous impact studies on VSLAs show the big role played by VSLAs in facilitating access to credit for the rural population, but which kinds of VSLAs are more appropriate for smallholder farmers is not yet documented. This study assesses the contribution of VSLAs’ with bundled services to improving rice productivity and income in Mvomero District, Morogoro using propensity score matching. Adopting a cross-sectional research design, the study involved the sample size of 350 smallholder rice farmers for quantitative data, whereby 145 were VSLA participants and 205 were non- VSLA participants and 56 for qualitative data. The quantitative data was obtained through a household survey where the questionnaires were administered and were analyzed using propensity score matching and logistic regression analysis with the help of Stata 14. Qualitative data was obtained through focus group discussions and key informant interviews and the information obtained was analyzed using thematic analysis. The study findings from PSM show that participation in VSLAs had a positive and significant impact on rice productivity and income (P=0.05) ranging from 1.997bag/acre/season and TZS 108,019 (nearest neighbour matching) to 2.776/acre/season and TZS 142,255 (Kernel matching) and 2.431 bag/acre/season and TZS 118,000 for radius matching. Moreover, through binary logistic regression and descriptive statistics, the study found that VSLAs with bundled and collective services, were the key determinants of credit access to smallholder rice farmers in the study area, and they saved more than 59% of the credits obtained by the smallholder farmers. Moreover, 83% of the credits obtained were invested in rice farming. Credit promotes access and use of farm inputs (fertilizers, agrochemicals, labour, and other technologies) that improved not only the yield per area but also the rice income. The credit obtained also enables the smallholder rice farmers to manage other income-generating activities which contribute to the household income. Thus, the study concluded that facilitating easy access to financial services to smallholder farmers will enhance rice sector development, which will contribute to food security and income in Tanzania. To overcome the constraints smallholder rice farmers encounter in accessing and using agricultural credit from formal financial institutions, the study recommended that the Government, policymaker implementers, and development partners should potentially be geared toward improving, strengthening, and supporting the VSLAs with bundled services which allow smallholder farmers to mobilize their capital and access credit both in cash and inputs.

Description

Dissertation

Keywords

Village savings, Lending associations, Rice productivity, Tanzania, Mvomero district, Morogoro

Citation