Rural Financial Inclusion: Prospects and Challenges of Collective Action in Extending Financial Services among Rural Smallholders Farmers in Tanzania
International Journal of Agricultural Economics
Volume 3, Issue 2, March 2018, Pages: 23-30
Received: Feb. 5, 2018;
Accepted: Mar. 26, 2018;
Published: May 8, 2018
Views 1456 Downloads 151
Alvin Uronu, Department of Extension and Outreach Programmes, Moshi Co-operative University, Moshi, Tanzania
Benson Otieno Ndiege, Department of Banking and Finance, Moshi Co-operative University, Moshi, Tanzania
The paper presents prospects and challenges of the collective action in facilitating access to financial services among smallholder farmers in rural areas. It is based on data collected through Focus Group Discussions (FDGs) from 11 cases of Savings and Credit cooperatives (SACCOs), Primary Agricultural Marketing Co-operatives (AMCOS) and Farmers Associations (FA) in Dodoma and Morogoro regions in Tanzania. By using the content analysis, the paper presents three major findings. First, the groups are much relevant in strengthening the ability of the smallholder farmers to access financial services. Second, The majority of smallholder farmers rarely payback their loans obtained through wholesale borrowing. Thus, wholesale group lending results into ineptness which leads to debt frightening. Failure to repay their loans increases financial burden as interest and fine enlarge the loan size. Consequently, frightening cooperation and sustainability of groups and deepening poverty among smallholder farmers. It was further observed that, the main reason for poor repayment of the loans is poor group lending implementation arrangements. Thus, the paper proposes the implementation arrangement of the wholesale lending method that would reduce financial risks and ensure sustainability of the groups.
Benson Otieno Ndiege,
Rural Financial Inclusion: Prospects and Challenges of Collective Action in Extending Financial Services among Rural Smallholders Farmers in Tanzania, International Journal of Agricultural Economics.
Vol. 3, No. 2,
2018, pp. 23-30.
Ahmad, Z., Abdullah, N. M. H., & Roslan, S. (2012). Capital Structure Effect on Firms Performance: Focusing on Consumers and Industrials Sectors on Malaysian Firms. International Review of Business Research Papers, 8 (5), 137-155.
Baland, J. M., Gangadharan, L., Maitra, P., & Somanathan, R. (2017). Repayment and exclusion in a microfinance experiment. Journal of Economic Behavior & Organization, 137, 176-190.
Barham, J., & Chitemi, C. (2009). Collective action initiatives to improve marketing performance: Lessons from farmer groups in Tanzania. Food policy, 34 (1), 53-59.
Besley, T., & Coate, S. (1995). Group lending, repayment incentives and social collateral. Journal of development economics, 46 (1), 1-18.
Cao, J., & Banaji, M. R. (2017). Social inferences from group size. Journal of Experimental Social Psychology, 70, 204-211.
Charles, G., & Mori, N. (2017). Loan repayment performance of clients of informal lending institutions: do borrowing histories and dynamic incentives matter?. International Journal of Development Issues, (just-accepted), 00-00.
De Quidt, J., Fetzer, T., & Ghatak, M. (2016). Group lending without joint liability. Journal of Development Economics, 121, 217-236.
Fern, E. F. (1982). The use of focus groups for idea generation: the effects of group size, acquaintanceship, and moderator on response quantity and quality. Journal of Marketing Research, 1-13.
Fischer, E., & Qaim, M. (2012). Linking smallholders to markets: determinants and impacts of farmer collective action in Kenya. World Development, 40 (6), 1255-1268.
Freedman, S., & Jin, G. Z. (2017). The information value of online social networks: lessons from peer-to-peer lending. International Journal of Industrial Organization, 51, 185-222.
Harper, M. (2007). Microfinance and farmers: Do they fit?. In What's Wrong with Microfinance? (Vol. 83, No. 94, pp. 83-94). Practical Action Publishing in association with GSE Research.
Hastings, J. S., & Mitchell, O. S. (2011). How financial literacy and impatience shape retirement wealth and investment behaviors (No. w16740). National Bureau of Economic Research.
Hellin, J., Lundy, M., & Meijer, M. (2009). Farmer organization, collective action and market access in Meso-America. Food Policy, 34 (1), 16-22.
Huppi, M., & Feder, G. (1990). The role of groups and credit cooperatives in rural lending. The World Bank Research Observer, 5 (2), 187-204.
Jayne, T. S., Mather, D., & Mghenyi, E. (2005). Smallholder farming in difficult circumstances: Policy issues for Africa. The Future of Small Farms, 103.
Jayne, T. S., Mather, D., & Mghenyi, E. (2010). Principal challenges confronting smallholder agriculture in sub-Saharan Africa. World development, 38 (10), 1384-1398.
Kaleshu, J., & Temu, S. (2012). Expansion of rural financial services through linkage banking in Tanzania: Is joint action between savings and credit cooperative societies (SACCOS) a promising approach? Enterprise Development and Microfinance, 23 (2), 146-160.
Kerr, N. L. (1989). Illusions of efficacy: The effects of group size on perceived efficacy in social dilemmas. Journal of experimental social psychology, 25 (4), 287-313.
Langergraber, K. E., Watts, D. P., Vigilant, L., & Mitani, J. C. (2017). Group augmentation, collective action, and territorial boundary patrols by male chimpanzees. Proceedings of the National Academy of Sciences, 114 (28), 7337-7342.
Markelova, H., Meinzen-Dick, R., Hellin, J., & Dohrn, S. (2009). Collective action for smallholder market access. Food policy, 34 (1), 1-7.
Mori, N., Nyantori, T., & Olomi, D. (2017). Effects of clients’ literacy on default and delinquency of savings and credit co-operative societies in Tanzania. Business Management Review, 19 (2), 1-12.
Ndiege, B. O., Qin, X., Kazungu, I., & Moshi, J. (2014). The impacts of financial linkage on sustainability of less-formal financial institutions: experience of savings and credit co-operative societies in Tanzania. Journal of Co-operative Organization and Management, 2 (2), 65-71.
Offe, C., & Wiesenthal, H. (1980). Two logics of collective action: Theoretical notes on social class and organizational form. Political power and social theory, 1 (1), 67-115.
Rivera, V. S., Cordero, P. M., Rojas, D. C., & O’Riordan, B. (2017). Institutions and collective action in a Costa Rican small-scale fisheries cooperative: the case of CoopeTárcoles RL. Maritime Studies, 16 (1), 22.
Ruteri, J. M. (2009). Supply chain management and challenges facing the food industry sector in Tanzania. International Journal of Business and Management, 4 (12), 70.
Simpson, B., & Aksoy, O. (2017). Cumulative advantage in collective action groups: How competition for group members alters the provision of public goods. Social Science Research.