Salient approaches for accessing credit to small scale farmers: a case of diffusion of tc Banana in arumeru District through a micro-credit scheme
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Date
2008
Authors
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Journal ISSN
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Publisher
Sokoine University of Agriculture
Abstract
Using survey data as well as secondary information, this study was set out to review the
operational mechanism of Diffusion of TC banana in Arumeru District through Micro
credit scheme, with the view to assess the approaches, strategies and performance in
accessing credit to smallholder farmers. It aimed at providing useful information to aid
decision making process and enhancement of access to credit by the majority of small-
scale producers. The study also aimed at determining factors that influence accessibility to
formal credit by the small scale farmers and micro-enterprises. The study wanted to
establish the empirical evidences on the links between credit use and poverty alleviation. It
also attempted to make assessment of the impact of the credit on income and improvement
of standard of living of tire credit users. In collecting the primary data, questionnaires were
administered to 45 randomly selected households in four villages namely Mbuguni,
Kilanyi, Valeska, and Poli. Collected data was analyzed into mean, frequency distributions
and percentages. Gross margin and cost- benefit analysis were used to determine and
measure the economic potentiality and impact of the scheme to the beneficiaries.
Generally, the performance of the micro- credit programme was encouraging. The
empirical evidence of the study indicates that the average gross margin/annum was TSh
532,905.- Benefit cost ratio, Net present Value (NPV) and Internal Rate of Return were
2.5, 2633685 and 94% respectively. These calculated indicators postulate a positive
investment potential.
The findings revealed that group lending approach is indispensable for lending small
holder farmers and credit facilities must be central to any poverty reduction strategies. The
approaches used for accessing credit was effective in reduction of lending transaction
costs and had immediate impact in improving the standard of living of people in the focal
Description
Keywords
Credit to small scale, Salient approaches, Small scale farm