Effect of Informal Credit on the Performance of Small Holder | 102777
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Effect of Informal Credit on the Performance of Small Holder Cashew Nut Farmers


George Kazumba*

Purpose: This study intended to examine the effect of informal financing among smallholder cashew nut farmers in Tanzania, specifically in southern regions including Lindi and Mtwara. Design/methodology/approach: Snowball technique was employed to respondents during data collection. Primary data was collected from 228 smallholder cashew nut farmers who had informal credit from informal moneylenders. Ordinary Least Square Estimation technique was employed to estimate the impact of informal credit on farmers’ performance. Volume of production per season was used as proxy of farmers’ performance. Originality: This study is original as it provides new insight on the impact of informal credit on smallholder cashew nut farmers’ performance. This is novel idea as hardly previous studied have linked specific informal credit on the performance of smallholder cashew nut farmers. Findings: The study reveals that informal credit is statically significant and positive related to volume of production of cashew nut. Farmers that borrow from informal moneylenders are argued to use the funds prudently, as it is evident that if money is prudently used, productions of cashew nuts improve. Policy implications: Policy makers should set a policy and guideline that will facilitate faire operationalization of informal financing arrangements for the mutual benefits of both borrowers and lenders of informal credits.

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