ACCESS TO CREDIT BY SMALLHOLDER FARMERS IN SWAZILAND: IMPLICATIONS FOR POLICY INTERVENTION
M. B. Masuku[1]
Abstract
Access to credit is a crucial factor in the development of the agricultural sector. Agricultural producers rely on credit facilities to raise the capital required to initiate and sustain productive endeavours. Using a sample of 308 purposively sampled smallholder farmers, who had access to credit from the four administrative regions of the country, this study examined smallholder farmers’ access to credit in Swaziland. The results indicated that amongst the formal sources of credit, most (58%) of the respondents sourced credit from Swazi Bank, and a modest number (17%) of the respondents used Building Society as their source of credit. Cooperatives were used by most (30%) of the respondents in quasi informal sources, followed by NGOs with 29% of the respondents. Amongst the informal sources of credit, most respondents used relatives (30%) and money lenders (24%). The results further revealed that the difference between the amount applied for and that received was statistically significant (a 0.05) in both credit markets, suggesting the existence of credit rationing in both formal and informal markets. The amount received from formal institutions was E773.54 less than the amount applied for, whilst the amount received from informal institutions was E62.16 less than the amount requested. The study concludes that given the established network of formal credit institutions, improving lending terms and conditions in favour of small-scale agricultural enterprises would provide an important avenue for facilitating smallholder farmers’ access to credit. It is recommended that a credit policy for smallholder farmers needs to be formulated.
[1] Department of Agricultural Economics and Management, University of Swaziland, P/B Luyengo, Luyengo, Swaziland. Email: