Impact of Group Microcredit Lending on Maize Productivity among the Small Holder Farmers in, Murang’a County, Kenya
Abstract
Availability, accessibility and affordability of rural credit is one of the key elements for transforming rural economies through enhancing agricultural productivity, food security and poverty reduction. A good number of farmers in Murang‘a County have engaged micro credit to boost maize production but the difference in productivity between beneficiaries and non beneficiaries have not been evaluated. This study Sought to examine the contribution of Microfinance services to food security of smallholder farmers in Murang‘a county. Descriptive and econometric analysis, were used to analyze the data. Primary data was collected from 200 respondents randomly selected from credit beneficially and non- beneficially groups in Kiharu constituency using a structured questionnaire. The study uses the ―counterfactual approach using propensity score matching to assess whether households who had participated in microfinance services had increased their maize yield compared to non-participants. Logit model was used to determinant factors that influence farmers participation in microfinance services. Multivariate logistic regression revealed that the amount of land allocated to maize production was significantly associated with credit borrowing. Results also indicate that the time a farmer has been in the group and maize yield had a positive and significant relationship. The results revealed that MFI membership and maize yield had a positive and significant relationship. In addition, results revealed that the frequency of meetings had a positive and significant effect on the credit borrowed. The distance to input and output markets had a negative and significant relationship with maize productivity. The results revealed that MFI membership and maize yield had a positive and significant relationship. In addition, results revealed that the frequency of meetings had a positive and significant effect on the credit borrowed. The results from Propensity Score Matching model show that household who had participated in group credit had increased maize yield by 30% as compared to non-participant. Sensitivity analysis indicated that the observed results on the impact of group access to credit on maize yield, were not biased towards those who received credit. The study recommends that small-scale farmers can work together as a recognized legalized entity in order to improve their bargaining ability and to take advantage of economies of scale. The research brings out unfulfilled potential for integrating microcredit firms into the mainstream rural financial systems. In addition, commercial banks are yet to exploit their full potential with regards to credit provision to high-potential small-scale resource constrained farmers.
Keywords: Group Microcredit Lending, Maize Productivity, Small Holder Farmers, Murang’a County, Kenya
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