The impact of microfinance services on the efficiency of family farms in Sub-Saharan Africa: the case of Cameroon

Abstract

PurposeDoes MFIs agricultural credit influence the determinants of the efficiency of SFF which are socio-economic factors of the farmers but also agricultural endowments of family farms? This paper aims to study the contribution of MFI services on improving the technical efficiency of SFFs in Cameroon.Design/methodology/approachThe stochastic frontier analysis (SFA) model permits the estimation of the technical efficiency indicators for beneficiaries and nonbeneficiaries of agricultural credits on a sample of 130 cocoa farming households and four MFIs of the same area between 2008 and 2011. The censored tobit model is used to assess the determinants of technical efficiency.FindingsThe results show that the SFF beneficiaries of agricultural credit have an average technical efficiency of 0.68 inferior to that of nonbeneficiaries (0.72) as expected. They are, respectively, at 0.32 and 0.28 of their full productive capacities. The results of the censored Tobit model show that socioeconomic characteristics of the producer such as age and gender explain negatively, while experience explains positively the technical efficiency of SFFs.Research limitations/implicationsAlthough without any selectivity bias, this study indicates the essential character of the socioeconomic factors in the amplification of the role of the MFIs credit on the efficiency of SFFs.Practical implicationsStrategies to improve the efficiency of SFFs require an increase in MFI credits, primarily targeting young, experienced and female farmers.Originality/valueThis study examines the efficiency of SFFs by highlighting the interaction between the socio-economic factors of farmers and the credit of MFIs. It also points to the problem of monitoring the implementation of agricultural financing.

Strategy in Developing Microfinance Institution to Support Beef Cattle Farming Business in Rural Areas

“…These obstacles include relatively high-interest rates, collateral, and long procedures in applying for credit [1]. The farmers' characteristics, particularly their educational level, affect access to finance because they are related to their ability to look for information, prepare proposals, and convince lenders [2], [3].…”

External finance and agricultural productivity growth

“…In either case, financial frictions cause net losses to the return on investments, potentially turning them negative. Moreover, in agricultural economics, the majority of the studies focused on the issue of access to credit and agricultural performance in single, less‐developed countries (e.g., Belek & Jean Marie, 2021; Guirkinger & Boucher, 2008; Narayanan, 2016; Nordjo & Adjasi, 2019; Sekyi et al, 2017). Less studies have focused on the intensive and semi‐intensive agricultural sectors of countries with developed financial markets, such as the EU or the United States.…”