Factors influencing access to credit by small scale farmers, A case study of Kamuli District in Uganda

Abstract

The study examines the factors influencing access to credit among small scale farmers in Kamuli district. The quantitative approach was used to quantify experiences and perceptions on access to credit among small scale farmers as advised by Timothy Guetterman, Michael Fetters,and John Creswell, (2015). A cross sectional study design was used to factors influencing access to credit among small scale farmers. A sample of 400 was considered using the simple random sampling method and the final sample comprised of 204 respondents. Data was collected using questionnaire and analyzed using frequency percentage, mean and standard deviation deemed appropriate. Primary data was collected mainly through administering the questioner. Data was analyzed using the Statistical Package for Social Sciences (SPSS V.25) statistical package for the social sciences, (SPSS). The descriptive analysis was done to show the mean, frequency distribution and percentage results. The study found that most small-scale farmer in Uganda majorly obtained financial credit from formal financial institutions such as Commercial Banks and MFIs and SACCOs. Farmer’s socio-economic characteristics that include age, gender, education level and possession of collateral greatly influenced access to financial credit among small scale farmers in Kamuli district. Long loan processing procedure, high interest rates, and short repayment periods institutional factors also constrained accessed to agriculture credit among small scale farmers in Kamuli district. To enhance access to credit by small scale farmers in Uganda, the study recommends top management interventions and need for stakeholders to promote formation of small-scale agriculture cooperative for channeling financial credit facility and increase their collective bargaining power. Commercial Banks, MFIs and SACCOs; Credit risk Committees should review the credit policy to provide for and promote social collateral, flexibility in collateral and affirmative action on credit policy for vulnerable groups like women, youth and tenants who may not have the valuable collateral. The study recommends lower management interventions requiring Credit Risk Managers considering rescheduling agriculture loans in arrears given the seasonality, yield failures and changes in seasons; the marketing department should promote agriculture insurance policy for farmers; credit officer should encourage farm households to investment in off-farm income generating activities to augment their repayment capacity.