Analysis of farmers’ access to agricultural credit from Equity Bank Uganda Limited, a case of Mukono District

Abstract

This study aimed at analyzing access to agricultural credit by the farmers in Uganda using the case of Mukono district. The objectives which guided the study were to; analyze the level of access to agricultural credit by farmers, examine the role of awareness on the availability of credit services to the farmers and determine the contribution of financial services to agricultural credit mobilization. A research design involves the adoption of a cross-sectional and descriptive survey design which will be used for the study. A cross-sectional study design was suitable because it helps the researcher gather data from a sample of a study population once at a particular time. A total of 285 respondents was arrived at from a population of 1100 farmers from Mukono district using Krejcie and Morgan (1970) sample size determination table. The population was obtained. Simple random sampling was used to select the sample size for the Farmers. According to Mugenda and Mugenda (2003), simple random sampling involves allocating equal chance to the selected elements in the population. The major approaches considered for this study included quantitative and qualitative approaches. Quantitative data was collected using questionnaires anchored on the 5-point Likert scale ranging from (1) strongly disagree, (2) Disagree, (3) Not Sure, (4) Agree, and (5) strongly agree. Qualitative data was collected using an interview guide. Key informant interview was employed to include a few farmers, bank administrators, and leaders of farmers’ associations. There are two (2) instruments needed for measuring quality control. These include reliability and validity. A descriptive data analysis technique was adopted in averages, computed, and presented in percentages, and data were analyzed using the Statistical Package for the Social Sciences software of data analysis (Saunders and Lewis, 2011). From the data obtained, it was concluded that the level of access to credit by the farmer in Mukono from Equity Bank was high as confirmed by the high level of agreement from the respondents to the dimensions used to measure their level of access to credit. It was concluded that Equity Bank had created awareness for Credit services to the Farmer in Mukono district. It also confirmed that the awareness also played a positive role in the availability and uptake of credit services from Equity Bank. It was concluded that Equity Bank contributed positively to the agricultural credit mobilization for the farmers in Mukono district by offering an enabling environment and awareness of the credit-relevant information to farmers. It was recommended that there is a need to modernize agriculture through mechanization and agro-processing. The Government needed to consider subsidizing interest on Agricultural loans. Disbursement of cash to farmers to buy inputs should be minimized but instead paid directly to vetted suppliers of these inputs should be paid to minimize the risk of Farmers diverting funds or being cheated when they buy from the suppliers who are not genuine. The government should design appropriate policies to improve access to credit for smallholder farmers.