An Evaluation On The Impact Of Access To Credit On Maize Output Amongst Smallholder Farmers In Kenya

Abstract

This paper aimed to examine the role of access to credit on maize output amongst smallholder farmers in Kenya. The study adopted an Ordinary Least Squares (OLS) regression model as its econometric approach. The study used the Kenya Integrated Household Budget Survey (KIHBS) dataset for the period 2005/2006. The study found that smallholder farmers who accessed credit produced much more maize in comparison to those who did not access credit. Concerning sex differences in smallholder maize production, the study found that male farmers were more likely to have higher maize output than female farmers. Further, the study established that soil fertility, tertiary education, use of inorganic fertilizer, investments in farm assets and increased farm size had an increasing effect on maize output amongst smallholder farmers in Kenya. The policy implications of the study findings are that legislators should create policies geared towards incentivising financial institutions to develop agricultural finance products by coming up with de-risking measures for this sector. The Kenyan government should also endeavour to provide an enabling environment for innovative financial technology companies to develop lending products earmarked for agriculture using mobile money. Concerning sex differences in maize production, policymakers at national and county level should intensify programs that target to expand females’ ability to access agricultural services, inputs and implements to reduce gender gap in producing maize in the country. The ability to purchase services and inputs lies upon female farmers having access to credit in equal measure as their male counterparts. Efforts should be geared towards reducing barriers of access to credit such as collateral and options should be developed by government and financial service providers to catalyse access to credit for women.