Determinants of smallholder farmers’ access to formal credit

A case of Bilate Zuria Woreda, Sidama national regional state, Ethiopia

Abstract

Credit is highly demanded in different parts of the world, mainly for capital requirement to improve land, purchase of main agricultural inputs including fertilizers, seeds, pesticides, and purchase of farm machinery. The purpose of this study was to identify determinants that limit small landholder households’ access to formal credit in the Bilate Zuria Woreda, Sidama National Regional State of Ethiopia. Primary and secondary data were used and analyzed by using SPSS version 20 and STATA Version 14. Sample sizedetermined by using Yamane, (1967) formula and 365 households selected using multistage sampling techniques. Binary logistic regression model was used to analyze the quantitative data. The result of the study revealed that 41.1 % of the respondents in the study area had access to formal credit while 58.9 % of the respondents did not have the access to formal credit. Also the results shows that credit access was determined by the variables likefarm size, extension service, awareness of availability of credit service, age, income level, lending procedure, number of livestock.This study recommends accessibility of credit to small land holder farmers could be improved by innovative credit scheme that that address small land holder farmers.