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Purpose – Users of smallholder farmer microfinance are able to make enough returns to repay credits
advanced to them. However, they are in dire need of financial capital such that they are inconsiderate of
farmer- and credit-specific characteristics when participating in a microfinance programme. This study
analyses perceptions of stakeholders regarding select farmer and credit characteristics within the
microfinance industry. The study identifies and analyses the factors that influence participation in a
microfinance programme by farmers using the logistic regression model. The purpose of this paper is to
widen the knowledge base of rural agricultural finance, including factors that influence participation in
microfinance intervention(s) thereof.
Design/methodology/approach – A total of 104 participants and 120 non-participant farmers in
microfinance programmes were interviewed using a semi-structured questionnaire by applying the
multistage sampling technique. The paper applied the logistic regression model in which farmer- and creditspecific
characteristics were used to estimate the probabilities of participation.
Findings – The logistic regression results showed that distance, interest rate, experience, membership of
farmer-based organisation, number of dependants, household, gender and age were statistically significant
farmer- and credit-specific characteristics that influence participation in microfinance programmes. Interest
rate and distance exact negative significance influence on participation, whereas membership of farmer-based
organisations, experience, gender, household head and age influence participation positively. Reduction in the
interest rate and expansion of microfinance to very remote areas rather than locations in urban areas are
crucial in terms of improving participation.
Research limitations/implications – The paper used data from only farmers so there is a limit to which
the results can be generalised for all microfinance users. It may be relevant to undertake a study that
considers non-farm enterprises.
Practical implications – This paper brings to light the need to develop well-structured
microfinance facilities that meet the specific needs of the rural poor in transitioning economies
while taking into consideration critical factors affecting participation before the establishment of
such programmes.
Originality/value – This paper provides empirical evidence to show that farmer- and credit-specific
characteristics are essential to ensure participation and success of microfinance programmes thereof. |
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