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Does credit market inefficiency affect technology adoption? Evidence from Sub-Saharan Africa

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  • Abdul-Hanan Abdallah

Abstract

Purpose - The purpose of this paper is to investigate factors affecting the adoption of agricultural technologies in Sub-Saharan Africa, specifically the role of credit market inefficiency in adoption of agricultural technologies in the region. Design/methodology/approach - Most importantly, the paper applies a 2SLS model on a unique data set on nine agrarian countries from Sub-Saharan Africa’s intensification of food crops agriculture (Afrint) to provide evidence on how credit market inefficiency affects adoption of technologies in the sub region. Findings - The study finds that the relationship between credit and technology adoption is one-way causal relation (i.e. credit access leads to technology adoption) as opposed to a two-way relation (i.e. mutual dependent relation). Further, the results indicate that credit market inefficiency can be a major barrier to the adoption of yield enhancing technologies in Sub-Saharan Africa. Further, the study showed mixed results for household variables. The results give credence to studies that highlight the importance of infrastructure and risk control in the adoption of new technologies. Research limitations/implications - The study is limited to only nine countries in Sub-Saharan Africa. Thus, the findings and interpretations should be considered as such. Further, there is the need for further research that considers all the region so as to establish whether or not there is a relationship between credit market inefficiencies and technology adoption in the region. Practical implications - The policy implication is that microfinance institutions should consider scaling up their credit services to ensure that more households benefit from it, and in so doing technology adoption will be enhanced. Originality/value - The main contribution of the study lies in its use of a unique data set from Sub-Saharan Africa’s intensification of food crops agriculture (Afrint) to investigation relationship between credit market inefficiency and technology adoption.

Suggested Citation

  • Abdul-Hanan Abdallah, 2016. "Does credit market inefficiency affect technology adoption? Evidence from Sub-Saharan Africa," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 76(4), pages 494-511, November.
    • Handle: RePEc:eme:afrpps:afr-05-2016-0052
    DOI: 10.1108/AFR-05-2016-0052
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    Citations

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    Cited by:

    1. Jellason, Nugun P. & Robinson, Elizabeth J. Z. & Ogbaga, Chukwuma C., 2021. "Agriculture 4.0: is sub-Saharan Africa ready?," LSE Research Online Documents on Economics 113550, London School of Economics and Political Science, LSE Library.
    2. Carrer, Marcelo José & Maia, Alexandre Gori & de Mello Brandão Vinholis, Marcela & de Souza Filho, Hildo Meirelles, 2020. "Assessing the effectiveness of rural credit policy on the adoption of integrated crop-livestock systems in Brazil," Land Use Policy, Elsevier, vol. 92(C).
    3. Hilson, Gavin & Hilson, Abigail & Maconachie, Roy, 2018. "Opportunity or necessity? Conceptualizing entrepreneurship at African small-scale mines," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 286-302.
    4. Edmund Mallinguh & Christopher Wasike & Zeman Zoltan, 2020. "Technology Acquisition and SMEs Performance, the Role of Innovation, Export and the Perception of Owner-Managers," JRFM, MDPI, vol. 13(11), pages 1-19, October.
    5. Balana, Bedru & Oyeyemi, Motunrayo, 2021. "Credit Constraints and Adoption of Agricultural Technologies in Developing Countries? Evidence from Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315347, International Association of Agricultural Economists.
    6. Jinxing Wang & Wanming Li & Shamsheer ul Haq & Pomi Shahbaz, 2023. "Adoption of Renewable Energy Technology on Farms for Sustainable and Efficient Production: Exploring the Role of Entrepreneurial Orientation, Farmer Perception and Government Policies," Sustainability, MDPI, vol. 15(7), pages 1-20, March.

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