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
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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.
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