Are African female farmers disadvantaged on the microfinance lending market?

Abstract

Purpose The purpose of this paper is to examine whether social and/or cultural obstacles faced by African female farmers diminish their accessibility to lending opportunities provided by a commercial microfinance institution; and affect their repayment performance. Design/methodology/approach The underlying data set is comprised of information regarding 9,710 farmers from Madagascar and was provided by the AccèsBanque Madagascar. Logit and Tobit models are applied to determine gender effects on loan accessibility and repayment performance, respectively. Findings Even though female farmers are associated with a lower repayment performance, they have a higher rate of loan application approval compared to male farmers. Research limitations/implications The results are limited to Madagascar and other African countries with similar socio-economic conditions. Social implications Commercial microfinance institutions still provide access to credit for disadvantaged groups, such as female farmers. Originality/value To the best of the authors’ knowledge, this is the first study investigating gender-specific credit access and repayment performance of rural African farmers using a data set from a commercial microfinance institution without a social mission for females.

Determinants of smallholder farmers’ access to microfinance credits

“…This MFI finances only women's businesses. Our result is consistent with reports by Sarwosri et al (2016) in Madagascar and Mbuba et al (2018) in Kenya. More recently, Sarwosri et al (2016) found that female farmers have a higher rate of loan application approval compared to male farmers.…”

“…Our result is consistent with reports by Sarwosri et al (2016) in Madagascar and Mbuba et al (2018) in Kenya. More recently, Sarwosri et al (2016) found that female farmers have a higher rate of loan application approval compared to male farmers. Also, Mbuba et al (2018) emphasized that women smallholders have better access to microfinance credits than men smallholders in Kenya.…”

“…Smallholder farmers with high educational level have a better understanding of bureaucratic procedures involved in the application, acquisition and repayment conditions of loans (Argaw, 2017), especially as loan granting process is long and meticulous in some MFIs (Weber and Musshoff, 2012). Mbuba et al (2018) and Sarwosri et al (2016) revealed that female smallholder farmers have better access microfinance credits than their male counterparts. Our second hypothesis is as follows:…”

“…From earlier studies, if the dependent variable is binary, Probit model or a Logit model is recommended. Mbuba et al (2018) and Samson (2018) used a Probit model to measure probability of credits access, while Sarwosri et al (2016), Argaw (2017) and Gbigbi (2017) employed Logit model in their studies as the choice between both models seems dependent on the researcher especially as results from Logit and Probit models are very akin. In this study, we employed Probit model (Equations (2)-( 4)), as it is better suited to smaller sample size (Cakmakyapan and Goktas, 2013).…”

Economic Instruments to Fund Solid Waste Management Services: Analysis and Recommendations for Jordan

“…However, with increase in access to loans and volatile interest rate charges in informal financial institutions, loan repayment might have been a burden to both farmers, thereby hindering vegetable farming. Sarwosri, et al (2016) found that female farmers had no challenges in accessing short term loans, whereas male farmers were well endowed with resources including access to financial support (Mishra et al, 2017) In addition Duhan (2017) found that vegetable farmers were faced with financial risks related to borrowing credit, which hindered vegetable farming.…”