Social Capital Dimensions and other Determinants Influencing Household Participation in Micro-credit Groups in Uasin Gishu County, Kenya

This paper examined the social capital dimensions and other determinants influencing household participation and level of participation in micro-credit groups in Uasin Gishu County, Kenya specifically Moiben division. In the study area, the microfinance institutions and other lending organizations have extended credit facilities to households through individual and group lending schemes in their bid to increase household access to credit. However, even with the recent proliferation of micro-credit groups a considerable proportion of the poor households in the area have not joined micro-credit groups. A structured questionnaire was used to gather information from 174 households from the division, using the multistage sampling technique. Heckman selection model was applied to identify factors that influenced households to join and the level of participation in the micro-credit group. The results indicate that age, gender, education farm size, household size, farm income and distance to the nearest financial institution influenced household decision to join the micro-credit groups. On the other hand age, farm size, total income, heterogeneity index, density of membership, years of experience in group borrowing and decision making index significantly influenced the level of participation. Based on the findings policy implications were drawn for improving household access to credit in the study areas. Key words: Access to credit, group lending, social capital and Heckman selection mode

The Influence of Social Capital Dimensions on Household Participation in Micro-Credit Groups and Loan Repayment Performance in Uasin Gishu County, Kenya

Lack of access to credit is a key obstacle for economic development of transitional economies such as Kenya. The underlying problem is related to information asymmetry combined with the lack of collateral by low income households. Microfinance led group lending model offer a new way to deal with this problem without resorting to collateral requirements. The core issue in group lending is that it systematically exploits elements of social capital that inherently exist in groups into an incentive contract that substitutes collateral; a formal bank conventional requirement of lending that is virtually unavailable to the poor. This study sought to ascertain the influence of social capital dimensions on households’ participation and repayment performance in micro-credit groups in the study area. The study was conducted in Moiben Division, Uasin Gishu County, Kenya based on a sample of 174 households selected using a multi-stage sampling technique. The data was collected using a personally administered structured questionnaire. In the analysis descriptive statistics, Heckman two stage and a Tobit regression models were employed. The results show that individual and group borrowers had significant differences in gender, age, farm size, years of education, income and land tenure. It was established that household size, farm income and distance to the nearest financial institution positively influenced a household to join micro-credit group. On the other hand age, gender, years of education, farm size and interest rate were found to be significant and negatively influenced household decision to join micro-credit groups. The level of household participation in micro-credit groups measured by the number of loan borrowings was significantly and positively influenced by age, total income, years of experience in group borrowing and decision making index while farm size, heterogeneity index and density of membership had a negative affect on household number of loan borrowings. Lastly, the results on group loan repayment performance using the Tobit model revealed that experience in group borrowing, number of visits by loan officer, peer pressure, meeting attendance index and heterogeneity index positively and significantly influenced loan default rate while gender, household size, distance to the nearest financial institution and density of membership were significant but negatively influenced household loan repayment performance. The study therefore recommends that MFIs should increase awareness and encourage poor households to form micro-credit groups. These institutions are obliged to provide training to households on group dynamics in order to take advantage of social capital existing within well organized and managed groups

How does climate exacerbate root causes of conflict in Mali? An econometric analysis

This factsheet gives answers on how climate exacerbates root causes of conflict in Mali, using a two-stage econometric approach. The findings show that food insecurity is the mechanism through which climate change influences conflict. Climate change indirectly exacerbates conflict by adversely affecting agricultural production and food security. This publication is part of a factsheet series reporting on the findings of the CGIAR FOCUS Climate Security Observatory work in Africa (Kenya, Mali, Nigeria, Senegal, Sudan, Uganda, Zimbabwe). The research is centered around 5 questions: 1. How does climate exacerbate root causes of conflict? 2. Where are hotspots of climate insecurities ? 3.What is the underlying structure of the climate, conflict, and socio-economic system? 4. Are climate and security policies coherent and integrated? 5. Are policy makers aware of the climate security nexus

The Influence of Social Capital Dimensions on Household Participation in Micro-Credit Groups and Loan Repayment Performance in Uasin Gishu County, Kenya

Lack of access to credit is a key obstacle for economic development of transitional economies such as Kenya. The underlying problem is related to information asymmetry combined with the lack of collateral by low income households. Microfinance led group lending model offer a new way to deal with this problem without resorting to collateral requirements. The core issue in group lending is that it systematically exploits elements of social capital that inherently exist in groups into an incentive contract that substitutes collateral; a formal bank conventional requirement of lending that is virtually unavailable to the poor. This study sought to ascertain the influence of social capital dimensions on households’ participation and repayment performance in micro-credit groups in the study area. The study was conducted in Moiben Division, Uasin Gishu County, Kenya based on a sample of 174 households selected using a multi-stage sampling technique. The data was collected using a personally administered structured questionnaire. In the analysis descriptive statistics, Heckman two stage and a Tobit regression models were employed. The results show that individual and group borrowers had significant differences in gender, age, farm size, years of education, income and land tenure. It was established that household size, farm income and distance to the nearest financial institution positively influenced a household to join micro-credit group. On the other hand age, gender, years of education, farm size and interest rate were found to be significant and negatively influenced household decision to join micro-credit groups. The level of household participation in micro-credit groups measured by the number of loan borrowings was significantly and positively influenced by age, total income, years of experience in group borrowing and decision making index while farm size, heterogeneity index and density of membership had a negative affect on household number of loan borrowings. Lastly, the results on group loan repayment performance using the Tobit model revealed that experience in group borrowing, number of visits by loan officer, peer pressure, meeting attendance index and heterogeneity index positively and significantly influenced loan default rate while gender, household size, distance to the nearest financial institution and density of membership were significant but negatively influenced household loan repayment performance. The study therefore recommends that MFIs should increase awareness and encourage poor households to form micro-credit groups. These institutions are obliged to provide training to households on group dynamics in order to take advantage of social capital existing within well organized and managed groups

How does climate exacerbate root causes of conflict in Sudan? An econometric analysis

This factsheet gives answers on how climate exacerbates root causes of conflict in Sudan, using a two-stage econometric approach. The findings show that food insecurity is the mechanism through which climate change influences conflict. In other words, climate change indirectly exacerbates conflict by adversely affecting food security. This publication is part of a factsheet series reporting on the findings of the CGIAR FOCUS Climate Security Observatory work in Africa (Kenya, Mali, Nigeria, Senegal, Sudan, Uganda, Zimbabwe). The research is centered around 5 questions: 1. How does climate exacerbate root causes of conflict? 2. Where are hotspots of climate insecurities ? 3.What is the underlying structure of the climate, conflict, and socio-economic system? 4. Are climate and security policies coherent and integrated? 5. Are policy makers aware of the climate security nexus

Farm resilience to climate change : The role of farmer entrepreneurship, farmer organizations and value chain collaboration

Climate change poses major and growing threats to global food security and livelihoods. For smallholders in sub-Saharan Africa (SSA) who depend mainly on agriculture for their food security and livelihoods, climate change is one of the major challenges facing the farming business. Among the main adverse climatic events facing smallholders in SSA include such as droughts, floods, rising temperature and erratic rainfall. These climatic events are uncertain both terms of occurrence and severity.  To minimize the impacts of climate change on their farms, farmers need to adapt their farm businesses by investing in climate change adaptation strategies such as climate-smart agriculture (CSA).  However, given the uncertain future, in terms of the frequency and severity of adverse climatic events, designing risk management strategies that require the identification of risks likely to occur in the future is no longer sufficient. There is, therefore, a need to strengthen farm resilience – the ability to ensure the continuity of farm functions when facing multiple shocks and risks through strengthening the absorptive, adaptive and transformative capacities. This thesis identifies farmer adaptive capacity as the principal determinant of farm resilience.The existing climate change adaptation literature has identified limited adaptive capacity among smallholders as one of the main factors explaining the low adoption of climate adaptation strategies. Against this backdrop, this thesis takes a step back and ask the question; how can farmer adaptive capacity be improved? Through a literature review, we identify three pathways from improving adaptive capacity at the farm level. These are; (a) taking advantage of farmer entrepreneurship, (b) membership of farmer organizations (FOs) and (c) exploiting the value chain collaboration such as the farmer-buyer relationships. We hypothesize that farmer entrepreneurial orientation (EO), membership of a farmer organization and the nature of the farmer-buyer relationship improve farmer adaptive capacity and this, in turn, strengthen the farm resilience.  We empirically test these hypotheses using data from 792 smallholders within the potato value chain in Kenya. We considered six climate-smart agriculture (CSA) practices that relate to potato production and are increasingly practised in the study areas in response to climate change, these are; irrigation, changing cultivation calendar, use of certified potato seed, crop rotation, soil testing and intercropping.  For the analysis, we applied multivariate probit models to unravel the role of farmer entrepreneurial orientation (EO) on the adoption of climate-smart agriculture. To examine the impact of membership and access to FOs services on the adoption of CSA, we employed the doubly robust inverse probability weighted regression adjustment (IPWRA) approach. Finally, through a  structural equation modelling (SEM) technique, we examined the association between the farmer-buyer relationship and farmer adaptive capacity.The findings are three-fold, first, that farmer entrepreneurial orientation (EO) enhances farmer adaptive capacity and this is exhibited by the increased adoption of climate-smart agriculture practices. Second, we find that membership in FOs is necessary but not sufficient for improving farmer adaptive capacity, for membership to be effective, member-farmers need to access and use the services provided by FOs. Third, the farmer-buyer relationship when mediated by farmer EO improve farmer adaptive capacity. The thesis concludes that there is a need for policies and interventions that develop farmer entrepreneurship; incentivize membership in FOs and support FOs to provide services to members; and improve value chain collaboration

Adoption of climate‐smart agriculture among smallholder farmers : Does farmer entrepreneurship matter?

Climate change poses significant challenges to agriculture, with serious impacts on smallholder farmers’ food security and livelihoods. Climate-smart agriculture (CSA) is being promoted to facilitate climate change adaptation and mitigation. While there is evidence that CSA supports smallholders’ adaption to climate change, the rate of CSA adoption remains low, particularly in sub-Saharan Africa. Previous studies have explained the low adoption based on generic factors such as farm, farmer, institutional and location characteristics, yet little is known about the role of farmers’ cognitive traits. This study investigates the influence of farmer entrepreneurial orientation, a cognitive trait reflecting a farmer's innovativeness, proactiveness and propensity to take risks. We use data from smallholder potato farmers in Kenya and estimate a set of multivariate probit models to analyse the adoption decisions. Results show that risk-taking positively influences the adoption of irrigation, changing cultivation calendar, use of certified seed, crop rotation and soil testing. Proactiveness is positively related to the use of irrigation, changing the cultivation calendar and use of certified seed, while it is negatively related to intercropping. Contrary to our hypothesis that innovative farmers are more likely to adopt CSA practices, we find a negative relation between innovativeness and the use of certified seed. After categorizing CSA practices based on the main resources required, we find that risk-taking is positively associated with the adoption of practices that require high intensity of skilled labour and financial resources. Innovativeness is negatively associated with practices that require high intensity of financial resources. Lastly, we find proactiveness to be positively associated with the adoption of finance-intensive practices but negatively associated with unskilled-labour-intensive practices. These findings imply, first, that development practitioners should consider the interrelations among CSA practices and farmer entrepreneurial orientation in designing development interventions. Second, policy-makers need to create an environment conducive to farmer entrepreneurship as an indirect way to support the adoption of appropriate CSA practices

Determinants of farm resilience to climate change: The role of farmer entrepreneurship and value chain collaborations

The concept of resilience gained traction in academic, policy, and development discourse in recent years, yet its conceptualization and application at the farm level has received little attention. For instance, recent policy recommendations present farm resilience as a silver bullet in dealing with agricultural risks and uncertainty, and in achieving sustainable agri-food systems. Yet, the question of what determines farm resilience in a smallholder farming set-up remains fuzzy. To address this knowledge gap, we firstly develop a novel conceptual framework based on determinants of farm resilience and farmer adaptive capacity as a pathway through which farm resilience is strengthened. The emphasis on adaptive capacity responds to a conceptual weakness inherent in studies that present socio-ecological systems as static systems. Secondly, based on a literature review, we propose mechanisms through which farmer entrepreneurship, membership in farmer organization, and farmer-buyer relationships may influence farmer adaptive capacity and thereby farm resilience. Based on our conceptual understanding of the determinants of farm resilience, we recommend approaches that augment farmer entrepreneurship, support farmer organizations, and strengthen farmer-buyer relationships.</p