The impact of the Europeun Union grant on access to credit and production in smallholder sugarcane agriculture in Siphofaneni, Eswatini
Maziya, Sikhanyiso Angel
African Economic Research Consortium
Credit is important because it enables farmers to increase agricultural production. Access to credit from commercial banks for smallholder farmers enhances productivity and promotes farmer development. It plays an important role in alleviating poverty and creating an economically stable life. However, access to credit for rural smallholder sugarcane farmers in Eswatini is limited. The purpose of this study was to assess the impact of a European Union (EU) grant on access to credit from commercial banks and farming activities for smallholder sugarcane farmers in Eswatini. The study determined whether smallholder sugarcane farmers had access to credit from commercial banks and other formal financial institutions. It also determined whether being a participant in an EU grant funding led to increased access to credit and to higher production for smallholder sugarcane farmers. The study determined the extent to which an EU grant funding contributed to eliminating constraints faced by smallholder sugarcane farmers. Data was analysed using Statistical Package for the Social Sciences (SPSS) software. Descriptive and econometric analyses were performed to identify the factors that influence access to credit and farming activities for smallholder sugarcane farmers. The Propensity Score Matching (PSM) was applied to identify the impact of the EU grant funding on access to credit from commercial banks and farm activities. The matching compared beneficiaries to non-beneficiaries of the EU grant funding in terms of the independent variables hypothesised to have an effect on access to credit. After the application of PSM, the average treatment effect on the treated was used to measure the appropriateness of the intervention of the EU grant funding on smallholder sugarcane farmers in Eswatini. Descriptive statistics show that 55% of the smallholder sugarcane farmers are male and their average age is 58 years. It also shows that about 37% of the smallholder farmers are illiterate, with only 32% attending primary school and only 31% attending high school. Lastly, it shows that, the major source of income for smallholder farmers is the sugarcane farming enterprise and that about 37.5 % of smallholder sugarcane farmers in Siphofaneni have been beneficiaries of EU grant funding.
access to credit, EU grant funding, propensity score matching, smallholder sugarcane farmers.