Access to formal credit and its linkace with agricultural technologies adoption: a case of smallholder farmers ln Zanzibar

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Sokoine University of Agriculture


This study was conducted in order to determine the extent of access to formal credit in rural Zanzibar and identify factors that influence smallholder farmers* access to formal credit. It also aimed to assess the linkage between access to credit and the adoption of agricultural technologies. In conducting the study, both primary and secondary data were collected. In the collection of primary data, questionnaires were administered to 750 randomly selected smallholder farmers. The data collected were analyzed descriptively and quantitatively. The results from the study reveal that outreach and access of formal credit in the study areas is low. About 78% of sampled households were found to be credit constrained. It was also revealed that 41% of the credit constrained households were relatively members of the more poor group in the study areas, while only 10% of the non-credit constrained belonged to this group. Furthermore, the study results suggest that the number of times one has received formal credit, keeping livestock, having a bank account, value of productive assets owned and household total income are important factors in influencing smallholder farmers* access to formal credit. The findings also show that the intensity of extension contacts, household size, and the value of productive assets are important factors in influencing agricultural technology adoption among non­ credit households, while the number of times one has ever received formal credit was found to have more influences in inducing technology adoption among credit constrained households. Based on these findings, it is recommended that smallholder farmers should be availed the opportunities of getting repeat loans in order to improve their chances of accessing credit in the formal credit markets and enhance adoption of agricultural technologies. Farming households can as well be encouraged to diversify their income sources within and away from agricultural activities through promotion of mixed farming and off-farm activities. The need to develop a saving culture in the farming communities is also crucial for ensuring the creation of sustainable and efficient financial system. Furthermore, it is recommended that in order to enhance adoption of agricultural technologies, extension services should be targeted to non-credit constrained households.



Technologies, Adoption:, Smallholder, Farmers, Zanzibar, Adoptional of agriculture technology