Main Article Content
The study investigated the determinants loan repayment in the two selected districts of Kongwa in Dodoma region and Kilombero in Morogoro region of Tanzania. The objective of the study was to identify the determinants of agro-credit repayment of small-holder farmers in Tanzania. The main problem in this study is the existence of high rates of non-compliance to Agrocredit transactions among smallholder farmers. Primary data were collected with the aid of structured questionnaire and key informants. Using a multistage sampling procedure, a total of 329 loan beneficiaries in the four segments namely; commercial banks, microfinance institutions (MFIs), government institutions and moneylenders were purposively and randomly selected and interviewed in the two districts. A Logistic (logit model) regression analyses were carried out to isolate and examine the determinants of loan repayment from the respondents' perspective. Findings revealed that the variables of farm size, type of crop, farming experiences, interest rates, and multiple borrowing were the main determinants of loan repayment. The findings also revealed that credit default rate was caused by high interest rates and loan access’ denial from commercial banks due to lack of bankable collaterals. The evidence from the analysis of the study indicating that farmer’s credit repayment is based on many factors which statistically proved significantly in both inferential and descriptive findings. Therefore, the study recommended the need for government to support the establishment of central collateral registry sometimes referred to as secured transactions which will unlock credit to smallholder farmers and assure them access to credits from both formal and informal sources at relatively low interest rates.
Wongnaa CA, Awunyo-Vitor D. Factors affecting loan repayment performance among yam farmers in the Sene District, Ghana. Economics and Informatics. 2013;2.
Pasha SA, Negese T. Performance of loan repayment determinants in Ethiopian micro finance - An analysis. Eurasian Journal of Business and Economics. 2014;7(13):29-49.
Coyle B. Framework for credit risk management. CIB Publishing. London. United Kingdom; 2000.
Mohammed SF. The self help groups (SHGs) linkage banking program: Concept and practice in Nigeria. The Bullion. 2005; 29(4):15-18.
Kuye OO, Chukwu VA, Awoke MU. Determinants of loan default and repayment rates by cassava farmers in the south-south Nigeria: A case study of bank of agriculture and union bank. International Journal of Science and Research (IJSR) 2015;4(10):2319-7064.
Ali AL-Sharafat JA, Qtaishat T, Majdalawi MI. Loan repayment performance of public agricultural credit agencies: Evidence from Jordan. Journal of Agricultural Science. 2013;5(6):1916-9752.
Roslan AH, Zaini M. Determinants of micro credit repayment in Malaysia: The case of Agro Bank. Humanity & Social Sciences Journal. 2009;4(1):45-52.
Oke J, Adeyemo R, Agbonlahor M. An empirical analysis of micro credit repayment in Southwestern Nigeria. Humanity and Social Sciences Journal. 2007;2(1):63-74.
Awunyo-Vitor D. Determinants of loan repayment default among farmers in Brong Ahafo region of Ghana. Journal of Development and Agricultural Economics. 2012;4(13):339-445.
Copisarow R. The application of micro credit technology to the UK: Key Commercial and Policy Issues. Journal of Microfinance. 2000;2(1):13-42.
Derban WK, Binner JM, Mullineux A. Loan repayment performance in community development finance institutions in the United Kingdom. Small Business Economics. 2005;25(4):319-332.
Nwachukwu IN, Alamba CS, Oko-Isu A. Determinants of institutional credit repay-ment performance among farmers in Afikpo North LGA of Ebonyi State, Nigeria: Effect of credit accessibility of farmers an agricultural investment and investigation of policy options in Kohansal. Razavi province Journal of Applied Scabies. 2008;8(23):455-4459.
Dadson A. Determinants of loan repayment default among farmers in Ghana Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana; 2012.
Dong F, Lu J, Feathersone A. Effects of credit constraint on productivity and rural household income in china selected paper prepared for presentation at the agri-cultural & applied economics association 2010 AAEA, CAES, & WAEA Joint Annual Meeting, Denver, Colorado. Economics approach; 2010.
Islam MA, Islam DR, Siddiqui MH, Karim L. Importance of agricultural credit for rural development of Bangladesh: A descriptive approach. International Journal of Business and Economics Research. 2014; 2(1):68-83.
Bolarinwa K, Fakoya O. Impact of farm credit on farmers socio-economic status in Ogun State, Nigeria. Journal of Social Sciences. 2011;26(1):67-71.
Flores IM. Rural development and food security in West Africa. FAO Agriculture and Economic Development Analysis Division Esp. Working Paper No. 04-02; 2004.
Gilla AS, Lassalle T. Akibana Mikopokwa vikundivya wakulima. Morogoro, Tanzania; 1994.
Arinaitwe A, Mwesigwa R. Improving credit accessibility among SME’s in Uganda. Global Journal of Commerce and Manage-ment Perspective. 2015;4(6):22-30.
Kamajou F. Government financing of development of small farm agriculture in centre-south province of Cameroon. A Thesis for award of PhD degree at University of Illinois. Urbana-Champaign. 1978;215.
Kinimoz RY. Viability of selected agricultural credit programmes in Ivory coast. A Thesis for award of PhD degree at University of Illinois, Urbana-Champaign. 1982;221.
Oladeebo JO, Oladeebo OE. Determinants of loan repayment among smallholder farmers in Ogbomoso Agricultural Zone of Oyo State. Ogbomoso, Nigeria. Journal of Social Science. 2008;17(1):59-62.
Imbuga BM. An assessment of the effect of inflation on loan repayment among institutions in Ghana. American Inter-national Journal of Contemporary Research. 2014;4(12):36-45.
Kohansal MR, Mansoori H. Factors affecting on loan repayment performance of farmers in Kharasan-Razavi province of Iran. A paper presented in a conference onInternational Research on Food Security. Natural Resource Management and Rural Development, University of Hamburg; 2009.
Awoke MU. Factors affecting loan acquisition and repayment patterns of smallholder farmers in Ika North – East of Delta State, Nigeria. Journal of Sustainable Tropical Agricultural Research. 2004;9:61-64.
Osakwe JO, Ojo MO. An appraisal of public sector financing of agricultural development in Africa with particular reference to Nigeria. CBN Economic and Financial Review. 1986;24(2):33-41.
Nnadozie AKO, Uzoigwe JI. Effectiveness of local sanctions on agricultural loan recovery under community banking in Enugu state. Journal of the Science of Agriculture, Food Technology and the Environment. 2002;2(1):56–62.
Mohamed R. Access to formal and quasi-formal credit by smallholder farmers and artisanal fishermen: A case of Zanzibar. In: Research on Poverty Alleviation. Mkukina Nyota Publishers, Dar Es Salaam; 2003.
Lwezaura D, Ngaruko D. Determinants of group participation: Option and impact of farmers’ participation in groups in Mbozi District. African Journal of Economic Review. 2013;1:2.
Vogelgesang U. Microfinance in times of crisis: The effects of competition, rising indebtedness and economic crisis on repayment behaviour. World Development. 2003;31(12):2085-2115.
Igwe CK, Egbson OM. Determinants of transaction costs for borrowers among farmers in Ikwuanon local government area, Arabia State. Nigeria. American Journal of Rural development. 2013;1(5): 116-120.
Kohansal MR, A. Nahvi. Effective strategies for the prevention of loan repayment default. International Journal of Management and Humanity Sciences. 2014;3(11):3454-3458.
World Development Report. Making Services Work for Poor People. World Bank. © World Bank; 2004.
Available:https://openknowledge.worldbank.org/handle/10986/5986 License: CC BY 3.0 IGO
Makorere RF. Factors affecting loan repayment behaviour in Tanzania: Empirical evidence from Dar es Salaam and Morogoro regions. International Journal of Development and Sustainability. 2014;3(3):481-492.
Bernard B, Awudu Y, Musah A. The effects of interest rate on micro, small and medium enterprises financing Decision in Wa Municipality of Ghana International Journal of Business, Humanities and Technology. 2014;4: 4.
Olagunju FI, Adeyemo R. Determinants of repayment decision among small holder farmers in southwestern Nigeria. Pakistan Journal of Social Sciences. 2007;4:677-686.