Factors Influencing the outcome of Formal Credit Requests by Small-Scale Rice Farmers in Teso District, Kenya
Small-scale farming plays a crucial role in poverty alleviation and hunger reduction in line with the first Millennium Development Goal (MDG). New rice technology was introduced in Kenya in 2003 to boost production, fill up the national rice deficit and improve food security. However, anecdotal evidence suggests that the adoption of the new rice technology remains below targets. The main reason cited by farmers for laxity is financial constraints, which impedes infrastructural development and acquisition of necessary inputs and equipment. However, no comprehensive study has ever focused on the relationship between farmers’ profile and the outcome of formal credit requests. Consequently, this study was conducted to identify and explain factors influencing the outcome of applications for formal credit by small-scale rice farmers in Chakol Division of Teso District. Farmers were identified through registers compiled and maintained by the Lake Basin Development Authority (LBDA) and traced to their homes. Both quantitative and qualitative analysis techniques were use to analyze the data. The study found that the outcome of applications for formal credit was significantly related to gender, marital status, education level, income, type of land tenure, land size, farming experience and number of previous credit requests. Furthermore, binary logistic regression models indicated that the outcome of formal credit requests was influenced by income level which accounted for the highest proportion of variance at 11.3 percent. This was followed by years of experience in rice farming (9.8%), education level (8.9%), land size (7.8%), gender (6.9%), land tenure (5.6%) and marital status (3.6%). The regression models explained up to 53.9 percent of variance in the outcome of credit requests by rice farmers. The study recommends the need: to inform farmers about existing credit products, interest rates and prequalification conditions, to help clear misconceptions and myths associate
