Evaluation of Factors Influencing Access to Credit Financial Services: Evidence from Smallholder Farmers in Eastern Region of Kenya

The access to credit financial services by the rural smallholder farmers in many occasions has revolutionized the rural development in a sustainable manner, and has greatly contributed to household food security and poverty reduction. This study sought to establish the main factors that affect smallholder farmers’ access to credit financial services in the Eastern region of Kenya using logistic regression model. The marginal effects results indicated that, education level, main occupation, and group membership were statistically significant with positive effects on access to credit financial services. However, household income was found to be significant with negative effects on access to credit financial services. Overall, this paper concludes with implication for policy to establish credit/loans offices close to farmers in order to reduce lending procedures, risks, and educate them on perceptions on loan repayment. Moreover, the government should enhance the development of local credit and distribution systems as well as enforcement of credit input services in form of in-kind lending to reduce fungibility into consumption expenditures. Finally, there is an urgent need for effective insurance training programs to mitigate the risks in farming, as well as financial literacy programs to familiarize smallholder farmers with the skills required to effectively understand, assess and utilize credit financial services towards enhancing their agricultural activities. Keywords: Evaluation; Smallholders; Credit Access; Financial Services; Eastern region; Keny

Determinants of the competitiveness of smallholder African indigenous vegetable farmers in high-value agro-food chains in Kenya: A multivariate probit regression analysis

Abstract Smallholder farmers are excluded from efficient and effective participation in high-value agro-food market chains due to major competitiveness constraints and several market failures along these chains. The purpose of this study is to contribute to the competitiveness of smallholder farmers in a more coordinated and sustainable way that promote their effective and efficient participation in high-value agro-food market chains. In particular, the study aims at determining the main role of households’ capitals, institutional, and access-related factors in conditioning the decision of smallholder farmers of African indigenous vegetables (AIVs) to access pillars of competitiveness in high-value market chains (HVMCs). For this purpose, a unique household-level data from a total of 1232 rural and peri-urban AIV-producing households were surveyed, and the data obtained were analysed by using a multivariate probit model. The results suggest that about two thirds of smallholder AIV farmers had access to at least one pillar of competitiveness in HVMCs. The model results show the presence of inter-dependency of household level decisions to access multiple pillars of competitiveness in HVMCs. Furthermore, the results also reveal that coping with shocks, coupled with access to information on market prices and warnings of unexpected events, contract farming, certification and modern irrigation technologies are the main conditioning factors to the access of the pillars of competitiveness by smallholder farmers. The promotion and implementation of a well-founded mobile phone-based information access platforms, as well as effective and efficient livelihood strategies that support smallholder farmers to access pillars of competitiveness, is of critical importance towards overcoming the major competitiveness constraints along high-value agro-food chains