Determinants Of Access To Agricultural Credit By Small Holder In Waliso Woreda, South West Shoa Zone Oromia Regional State, Ethiopia

Abstract

The study was aimed analyzing determinants of access to agricultural credit by smallholder in Woliso Woreda, South West Shoa Zone Oromia. The specific objectives to analyze the determinants of smallholder farmers’ access to formal agricultural credit, to examine sources of formal agricultural credit in smallholder farmers’ and to investigate challenges in loan repayment process of agricultural credit in smallholder farmers. The primary data for this study were collected from 192 households based on two stage random sampling method. Logit model was used to analyze the determinants of smallholder farmers’ access to formal agricultural credit. The survey result indicated that from 192 sample farmers, 65.10 % of them were access to credit whereas 34.90% were non-accessibly. In the study area, the agricultural credit loans threatened by bad weather condition, political instability, bad household credit repayment habit/culture, time of repayment collected, lack follow up by lending institution, un profitable business basis, poor group management , inflation and lack training. Logit estimation result reveals out of twelve explanatory, experiences in credit use from the formal sources, farm size and annual farm income significantly and positively affected access to agricultural credit, again distance from lending institutions and collateral or group formation significantly and negatively affected access to agricultural credit. Therefore, strategies aiming at individuals may have access to agricultural credit, without forming groups, reduce the problem of collateral and guarantor requirement which are prerequisite for accessing institutionalized credit. Therefore, strategies aiming at promoting access to agricultural credit should focus on encouragement, enhance efficient utilization of the existing limited farm land, developing the skills what farmers have through at individuals may have access to agricultural credit without forming groups, and reduce the problem of collateral and guarantor requirement which are prerequisite for accessing institutionalized credit