Access to Credit and Its Determinants in Gubalafto District

Access to credit is an indispensable prerequisite for agricultural development where agriculture is found with a shortage of agricultural technologies and recurrent drought. This paper examines access to credit and its determinants in Gubalafto district. Primary data from 250 households were collected. To select a sample household, a multistage sampling technique was exercised. Questionnaire and interview were utilized to collect primary data. Both descriptive and econometric methods of analysis were employed. For econometric analysis with necessary statistical diagnosis tests, a logistic regression procedure was developed on farmers’ socio-economic cross-sectional data collected in 2018.

The descriptive statistics revealed that the amount of credit is very low and the interest rate is high. The Econometrics model showed that sex, education level, family size, land size of the household, access to extension service and annual earned income were found to be significant in determining access to credit. These results have important policy implications to reduce interest rates and increase loan size and minimizing the distance between credit institutions and farm households.