Influence of Credit from Diverse Sources on the Performance of Smallholder Horticultural Agripreneurs in Kenya

Abstract

This study sought to evaluate the influence of credit from diverse sources on the performance of the smallholder agricultural agripreneurs in Kenya. The majority of the developing economies are dependent on the agriculture sector which is mainly driven by the smallholder agripreneurs. However, despite the critical role that the agriculture sector plays in these developing economies in terms of food security, employment creation and poverty reduction, smallholder agripreneurs are unable to readily access credit from the formal financial institutions to improve their agricultural enterprises. To mitigate this challenge, this has led the smallholder agripreneurs to explore ways of getting credit from the informal financial sector. This study endeavoured to investigate the significance of credit from various sources and how this affects the performance of the smallholder agripreneurs in terms of production, job creation and amount of income realized. The study used descriptive design method to collect data from the target population of 337 smallholder horticultural agripreneurs. Data was collected from a sample size of 106 respondents using structured questionnaires. The data was analysed using multiple regression model and IBM SPSS Statistics 25. The study revealed that only 19.3 % of agripreneurs’ enterprise challenges were addressed by access to finance. Credit sourced from formal financial institutions, traders and processors and from group savings associations was found to have significant influence on the performance of the smallholder agripreneurs since it increased production as well as gross and net income for the agripreneurs. These credit sources were found to be popular and effective for the development and growth of smallholder agricultural enterprises. However, credit sourced from family and friends did not have a significant influence on the smallholder agripreneurs’. The study recommended for the development of a policy framework that could help in developing and scaling-up the use of credit from both the formal and the appropriate informal sources. Since the study found that access to finance only tackles 19.3% of agripreneurs’ enterprise challenges, it was recommneded that all smallholder agripreneurs should be sensitized to this fact to help them to plan and manage their enterprises more effectively. Smallholder agripreneurs were encouraged to join group savings associations to help them develop a resilient savings culture bolstered by the groups’ peer accountability structures. The study recommended that other similar studies should be carried out within and without Kenya to support the generalization of this study findings.