Factors influencing access to agricultural credit among smallholder farmers: a case of Mukono district

Abstract

Uganda like many other developing countries is highly dependent on agriculture for income generation and job creation. Because the sector is mainly composed of smallholder farmers, lack of finance remains the leading obstacle to development. This study was carried to determine factors that influence access to agricultural credit by smallholder farmers in Mukono district, Uganda. The study employed mixed method research design with data having been collected from 114 respondents via cross sectional survey. Simple random sampling technique was used to obtain the respondents to be interviewed. The data were analysed using descriptive statistics and a logistic regression model. Logistic regression model in particular was employed to determine factors that influence smallholder farmers’ access to financial services and obstacles encountered by smallholder farmers in raising Agriculture finance. The study reveals that education, lending procedure and membership to farmers association are significant factors influencing smallholder farmers’ access to agricultural credit. Policy options and recommendations include encouragement of forming farmers’ association, improving farmers’ literacy on financial management issues, easing of lending procedures by lending institutions could boost agricultural credit access in Uganda.