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Improving credit allocation to sustainable agriculture in Sub-Saharan Africa: Review of bio-based economy benefits

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  • Benjamin, Olatunbosun

Abstract

Financing of agriculture by commercial and non-commercial institutions in rural Sub-Saharan African in recent years has being relatively constant despite remarkable increase in the number of institutions operating within this area. This development may be attributed to how these institutions rate the business of agriculture and the risks involved. However the slow pace of financing sustainable agriculture such as bio-based economy in the presence of internationalization i.e. Clean Development Mechanism CDM and voluntary carbon market needs to be analyzed. Diverse literature are used in exploring the potential of “bio-based economy” with emphasizes not just on carbon sequestration but agricultural value added. The results suggest that if financial and non-financial institution re-evaluate and reassess their stands on sustainable farming, development of sustainable agriculture in rural areas is inevitable. Constraint to agriculture financing due to lack of access to credit may be reduced if innovative and sustainable smallholders are identified.

Suggested Citation

  • Benjamin, Olatunbosun, 2012. "Improving credit allocation to sustainable agriculture in Sub-Saharan Africa: Review of bio-based economy benefits," MPRA Paper 41313, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41313
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    File URL: https://mpra.ub.uni-muenchen.de/41313/1/MPRA_paper_41313.pdf
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    References listed on IDEAS

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    1. Jayne, T. S. & Yamano, Takashi & Weber, Michael T. & Tschirley, David & Benfica, Rui & Chapoto, Antony & Zulu, Ballard, 2003. "Smallholder income and land distribution in Africa: implications for poverty reduction strategies," Food Policy, Elsevier, vol. 28(3), pages 253-275, June.
    2. Perez, Carlos & Roncoli, Carla & Neely, Constance & Steiner, Jean L., 2007. "Can carbon sequestration markets benefit low-income producers in semi-arid Africa? Potentials and challenges," Agricultural Systems, Elsevier, vol. 94(1), pages 2-12, April.
    3. Simtowe, Franklin & Zeller, Manfred & Diagne, Aliou, 2009. "The impact of credit constraints on the adoption of hybrid maize in Malawi," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 90(1).
    4. John M. Antle & Bocar Diagana, 2003. "Creating Incentives for the Adoption of Sustainable Agricultural Practices in Developing Countries: The Role of Soil Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1178-1184.
    5. Ani L. Katchova & Peter J. Barry, 2005. "Credit Risk Models and Agricultural Lending," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 194-205.
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    Cited by:

    1. Paunić, Alida, 2016. "Brazil, Preservation of Forest and Biodiversity," MPRA Paper 71462, University Library of Munich, Germany.
    2. Emmanuel Benjamin & Matthias Blum, 2015. "Participation of smallholders in carbon-certified small-scale agroforestry: A lesson from the rural Mount Kenyan region," Economics Working Papers 15-03, Queen's Management School, Queen's University Belfast.

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    More about this item

    Keywords

    agricultural credit; carbon (CER); sustainable agriculture; collateral;
    All these keywords.

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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