Estimating yield and income effects of formal credit-based programme among tomato farmers in the Greater Accra Region of Ghana

Abstract

Empirical evidence on the impact of formal credit interventions to enhance the activities of poor people has produced mixed results. This study analysed the impact of formal credit programme(s) on yield and income per hectare of tomato farmers in the Greater Accra Region of Ghana. The paper aims at broadening the horizon of rural agricultural finance and, specifically, the impact of formal credit intervention measures. By applying a multistage sampling procedure, 224 tomato farmers were sampled and interviewed with semi structured questionnaire. We used the Propensity Scores Matching (PSM) technique to estimate the impact of formal credit intervention. We find that participation in formal credit programme(s) has increased significantly yield and income per hectare by 1.88 metric tons and GH¢1537.78 respectively despite the perceived high risk of advancing formal credit to tomato farmers in the Greater Accra Region. Formal credit, when well structured to meet the needs of farmers, can help to improve yield and income. We, therefore, recommend expansion of formal credit programmes that address the specific needs of smallholder farmers to help to reduce poverty, improve food security and promote inclusive development.

Keywords

• Impact
• Formal credit
• Yield and income
• Tomato farmers
• Propensity score matching