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Effects of village savings and loan association on agricultural value productivity in Northern Region of Ghana

Effects of village savings and loan association on agricultural value productivity in Northern... Agriculture in Ghana is dominated by smallholder farmers in rural areas. Majority of these farmers are resource-poor and faced with serious challenges in accessing formal financial services towards farming needs attributed to the stringent requirements. To bridge this gap, village savings and loan associations (VSLA) have been promoted in rural areas as an alternative to meeting the credit needs of smallholder farmers. Credit plays a vital role in input acquisition among farmers for improved agricultural value productivity. This study assesses the contribution of VSLA to agricultural value productivity in the Northern Region of Ghana.Design/methodology/approachThe methodology is a primary cross-sectional data collected with the help of a semi-structured questionnaire. This study, therefore, applied a propensity score matching (PSM) to assess the effects of VSLA on agricultural value productivity.FindingsResults from the PSM revealed that extension contact, contract farming, television set ownership, participating in “Planting for Food and Jobs” and nature of roads, including receiving VSLA information from members' increases participation decision of farmers in VSLA. Conversely, age of a farmer, household size, distance to output market and farmers in the Sagnarigu Municipality have negatively influenced VSLA participation. The propensity score matching estimates showed that members of VSLA obtained 38.2% higher agricultural value productivity than non-members.Originality/valueVillage savings and loans associations can be promoted among smallholder farmers as an effective alternative to formal financial service for inclusive development. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

Effects of village savings and loan association on agricultural value productivity in Northern Region of Ghana

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0002-1466
DOI
10.1108/afr-02-2020-0024
Publisher site
See Article on Publisher Site

Abstract

Agriculture in Ghana is dominated by smallholder farmers in rural areas. Majority of these farmers are resource-poor and faced with serious challenges in accessing formal financial services towards farming needs attributed to the stringent requirements. To bridge this gap, village savings and loan associations (VSLA) have been promoted in rural areas as an alternative to meeting the credit needs of smallholder farmers. Credit plays a vital role in input acquisition among farmers for improved agricultural value productivity. This study assesses the contribution of VSLA to agricultural value productivity in the Northern Region of Ghana.Design/methodology/approachThe methodology is a primary cross-sectional data collected with the help of a semi-structured questionnaire. This study, therefore, applied a propensity score matching (PSM) to assess the effects of VSLA on agricultural value productivity.FindingsResults from the PSM revealed that extension contact, contract farming, television set ownership, participating in “Planting for Food and Jobs” and nature of roads, including receiving VSLA information from members' increases participation decision of farmers in VSLA. Conversely, age of a farmer, household size, distance to output market and farmers in the Sagnarigu Municipality have negatively influenced VSLA participation. The propensity score matching estimates showed that members of VSLA obtained 38.2% higher agricultural value productivity than non-members.Originality/valueVillage savings and loans associations can be promoted among smallholder farmers as an effective alternative to formal financial service for inclusive development.

Journal

Agricultural Finance ReviewEmerald Publishing

Published: Sep 29, 2021

Keywords: Agricultural value productivity; Village savings and loans associations (VSLA); Credit; Propensity score matching (PSM); Smallholder farmers; Northern region; Ghana

References