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Credit Constraints and Agricultural Risk for Non‐Farm Enterprises

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  • Ousman Gajigo

Abstract

This paper uses two nationally representative datasets collected in 1992 and 2003 in Gambia to analyse small, non‐farm enterprises. The results reveal evidence of significant credit constraint among these non‐farm enterprises. Specifically, household wealth is a significant determinant not only of entry into the enterprise sector but also determines investment levels conditional upon entry. Furthermore, the marginal returns to investments in enterprises are very high and significantly exceed the prevailing lending rates of banks in the country. Besides being credit constrained, these enterprises are also affected by farm‐related variables. Agricultural risk adversely affects enterprise investment. This latter result underscores the importance of livelihood diversification.

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  • Ousman Gajigo, 2013. "Credit Constraints and Agricultural Risk for Non‐Farm Enterprises," African Development Review, African Development Bank, vol. 25(4), pages 648-662, December.
    • Handle: RePEc:bla:afrdev:v:25:y:2013:i:4:p:648-662
    DOI: 10.1111/1467-8268.12059
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    4. Gilbert Onionkiton Adjimoti & George Tsey-Mensah Kwadzo & Daniel Bruce Sarpong & Edward Ebo Onumah, 2017. "Input Policies and Crop Diversification: Evidence from the Collines Region in Benin," African Development Review, African Development Bank, vol. 29(3), pages 512-523, September.

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