Microfinance as a pathway for smallholder farming in Zimbabwe

Abstract

Microfinance has been viewed as a pathway for smallholder farming. This paper aims to investigate the impact of microfinance on smallholder farming. It examines the role of microfinance in the development of smallholder farming. This paper employs the integrated view of microfinance study as opposed to the ‘credit only’(minimalist) view. Using qualitative research methodology, the paper relies on literature review and primary data. Household level data (primary) were collected from a rural district (Masvingo Rural District) of Masvingo province in Zimbabwe. Data were collected from 250 microfinance participants (household heads) using questionnaires and face-to-face interviews. The findings show that microfinance had positive effects on accumulation of agricultural assets, income from agriculture, agricultural education, agricultural productivity, agri-business, consumption and health. However, the impact is limited due to lack of finance. Basic financial services are essential for the management of their smallholder farming activities. The practical implications are that the study results could be used by the government and development agencies for policy making. The paper recommends that microfinance should be harnessed as a useful intervention that can be employed to economically empower the smallholder rural agricultural sector. Keywords: microfinance, smallholder farming, integrated view, minimalist view. JEL Classification: G21, O13