Analysis of agricultural credit in development projects: a case study of the Southern highlands project in Tanzania
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Date
2000
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Abstract
This study is an evaluation of the role of the Southern Highlands Extension and Rural
Financial Services Project (SHERFSP) in extending credit to smallholder farmers in
Southern Tanzania. It also assesses the impact of such credit on agricultural
production of smallholder farmers in the period 1995/96 to 1997/98. Data for the study
were collected from a sample of 120 smallholder farmers from twelve villages in Iringa
rural and Mufindi districts in Iringa region. Secondary data were collected from SHERFSP
to assess its performance.
Results of the study reveal that SHERFSP uses a group lending approach to extend credit
to smallholder fanners. Fanner’s socio-economic factors that influence acquisition of
credit from the SHERFSP are average cash from crop sales, average cost from hired
labour, expenditure on inputs, average cash from off-farm activities and farmers’
awareness about existence of SHERFSP.
An assessment of the impact of credit was made by comparing users and non-users of
SHERFSP credit. Results show that there is a significant difference in farm input use, farm
outputs and farm income levels between borrowers and non-borrowers. This implies that
the acquisition of credit from SHERFSP had an impact on farmers. Those who obtained
credit used higher levels of inputs, had higher farm output and farm income. Major
problems encountered by smallholder farmers in procuring and use of credit are delays in
the delivery of inputs, inadequate amounts of the loans received, poor supervision and
Description
Dissertation
Keywords
Credit Development, Agriculture analysis, Southern Highlands Extension, Rural Financial Services Project (SHERFSP)