Determinants of Solidarity Financing of Agriculture in Remote Areas: The Case Study of Jean Rabel, Haiti

Abstract

Agriculture is the main activity of rural households in most developing countries. However, farmers do not have access to banking services to finance their farming operations. In the case of Haiti, they then create their own self-managed solidarity financing organizations called “Associations de Base de Cotisations et de Prêts (ABCP)”, in French. It has already been demonstrated that the financing of these self-help groups represents an important alternative financing. But few if any studies were focused on their ability to finance agriculture. Meanwhile, in remote areas where traditional finance organizations are absent, ABCP extend financial services to the poor, facilitating their agricultural and commercial activities. This study aimed to study what characteristics are associated with this new and under-documented agricultural solidarity financing. We surveyed two hundred and two (202) farmers in the municipality of Jean Rabel. The results of econometric analysis showed that farmer’s location, farm size, type of crop, and credit costs were the main characteristics significantly linked with the amount of financing received from ABCP in 2021. The study also revealed that solidarity financing accounted for 36% of all farm expenses. These results confirm previous research arguing that ABCP are alternative finance organizations. They are therefore an important source of agricultural and rural credit. Finally, we provide recommendations for future research on solidarity agricultural finance and ABCP refinancing.

Keywords

• ABCP
• alternative finance
• Farmers
• Jean Rabel