Contribution of village savings and lending associations to improving rice productivity and income in Mvomero district, Morogoro, Tanzania
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Date
2022
Authors
Journal Title
Journal ISSN
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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