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Is Micro-Finance Achieving Its Goal Among Smallholder Farmers in Africa? Empirical Evidence from Kenya Using Propensity Score Matching

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  • Owuor, George

Abstract

With access to formal credit proving almost impossible to smallholder farmers, group based lending is steadily becoming popular in Africa. However, little is documented on the role of such programmes. In this paper, we employ propensity score matching method to evaluate effects of micro-finance credit (MFC) on borrower’s productive performance in Kenya. Our findings reveal that participation in MFC credit improves household productive incomes by a range of between US$ 200 and US$ 260 in a single production period. However, participation in the MFC among smallholder farmers is constrained by low literacy levels, gender differentials in asset endowment, poor road infrastructure, and maintenance of indigenous group structures as key factors for policy intervention

Suggested Citation

  • Owuor, George, 2009. "Is Micro-Finance Achieving Its Goal Among Smallholder Farmers in Africa? Empirical Evidence from Kenya Using Propensity Score Matching," 2009 Conference, August 16-22, 2009, Beijing, China 51470, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51470
    DOI: 10.22004/ag.econ.51470
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    1. Paxton, Julia & Graham, Douglas & Thraen, Cameron, 2000. "Modeling Group Loan Repayment Behavior: New Insights from Burkina Faso," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 639-655, April.
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    3. Zeller, Manfred & Sharma, Manohar & Ahmed, Akhter U. & Rashid, Shahidur, 2001. "Group-based financial institutions for the rural poor in Bangladesh: an institutional- and household-level analysis," Research reports 120, International Food Policy Research Institute (IFPRI).
    4. Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
    5. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    6. Panna Sharma, 2002. "The Sharma Group," Palgrave Macmillan Books, in: Management Consultancy, chapter 26, pages 193-196, Palgrave Macmillan.
    7. Hossain, Mahabub, 1988. "Credit for alleviation of rural poverty: the Grameen Bank in Bangladesh," Research reports 65, International Food Policy Research Institute (IFPRI).
    8. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
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    Cited by:

    1. Mwambi, Mercy & Oduol, Judith & Mshenga, Patience M. & Mwanarusi, Saidi, 2013. "Does Contract Farming Improve Smallholder Farmers Income? The Case of Avocado Farming in Kenya," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161514, African Association of Agricultural Economists (AAAE).
    2. Wainaina, P. & Njagi, T. & Onyango, K., 2018. "Credit constraints, off-farm participation and productivity; case of Kenyan rural sector," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277050, International Association of Agricultural Economists.
    3. Collins Asante-Addo & Jonathan Mockshell & Manfred Zeller & Khalid Siddig & Irene S. Egyir, 2017. "Agricultural credit provision: what really determines farmers’ participation and credit rationing?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 77(2), pages 239-256, July.

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