Critical factors that affect the accessibility of credit services by small-scale tea farmers
The study was set to determine the critical factors that affect the accessibility of credit by small scale tea farmers. The study will assist small scale farmers with adequate knowledge on how to access credit and the approach in dealing with the challenges experienced. Financial institutions that provide credit will get information on the views of the small scale farmers who are their customers. The study is also a source of reference material for similar field studies. The survey design was used in the study, since the objective was to investigate the factors affecting credit access. The population of study consisted of 450,000 registered small scale farmers and the credit providers. The study employed stratified random sampling to choose a sample of 50 farmers for the study. One region out of seven regions as per KTDA geographical spread was selected and then a factory was selected from the region. Then 50 farmers registered at the factory were chosen randomly. The stratum was based on the sizes of tea farms of the respondent. Twenty credit providers were selected using the list of Banks licensed to operate in Kenya and the SACCO‘s that provide credit to the small scale tea farmers as per records available at KTDA. The data collection tool used was close-ended questionnaires. The data were analyzed and then presented using tables, pie charts and graphs. The findings showed that most farmers obtain their main income from tea, and tea farms ranged from half and acre to one acre. Most of the respondents had been in the tea farming for 10-20 years. Factors that affected credit access were collateral and farmers lack of understanding of credit services and products. The source of money for inputs was established to be loans and farmers‘ savings. To improve credit access, the respondents recommended that infrastructure should be improved to ensure service providers are closer to the customers. Information technology should also be improved to ensure awareness among customers. The study concluded that from the farmers‘ point of view, collateral and lack of information were the most significant factors affecting small scale tea farmers access to credit facilities. The lack of information on the lending process also affected decision making among the small scale tea farmers. The study recommended that improving access to credit facilities can only be successful if farmers are enlightened on the credit process, in addition, collateral should also be put ready by farmers applying for credit or alternatives to collateral sought.