Factors that influence savings of small scale tea farmers in Kericho town- Kenya

Abstract

Saving has been a challenge to a lot of people since time in memorial. The tea business is a thriving industry in Kenya considering that tea has a huge market in Europe, Asia, and some parts of Africa e.g. Egypt. It is believed that the tea farmers are casualties when it comes to the aspect of putting their proceeds into good use and hence they have not really embraced the savings discipline. Most studies have not been conclusive on the factors that influence savings among various individuals and households especially in the developing countries. The purposive explanatory survey was conducted in Kericho town where factors that influence savings among Kericho town based tea farmers were being investigated. Primary data was collected from a sample of 190 tea growers, purposively selected using cluster sampling technique. Through the application of principal and component analysis and frequency distribution analysis the finding was that the majority of the respondents viewed dependency ratio, income, access to credit and access to Sacco as influencing their decision to save to a very great extent. Age, gender and tax were seen to have no effect on influencing the tea growers’ decision to save. Interest rate as a factor had two extreme views where an equal percentage viewed it as a factor that influence their saving decision to a very great extent and a similar percentage viewed it as not influencing their saving decision. Other common factors that positively influence the growers’ decision to save include the desire to expand businesses, retirement needs, school fees and emergency needs. The study concluded that various factors that influence individuals or household decisions to save have varying effects in different settings. There are no factors that are cast in stone to cut across the board that can be conclusively generalised to have the same effect on individuals of all walks of life. This study is of value to policy makers on economic issues and brings attention to the government on the levels of savings among this sector of the society. Decision makers in the financial services industry can also take advantage of the findings. The study recommends a wider scope survey covering the whole country to assess the factors that influence saving among tea farmers on a national level and an assessment of savings discipline among the farmers.