ACCESS TO CAPITAL FINANCE AND PERFORMANCE OF SMALL SCALE FARMS IN NYANDARUA COUNTY, KENYA
Abstract
The general objective of this study was to establish the effect of access to capital finance on the performance of small scale farms in Nyandarua County. The specific objectives include identifying the effect of money market, cost of credit, terms of credit and, financial knowledge on the performance of small scale farmers in Nyandarua County. Finance and growth theory, finance and inequality theory are the two main theories that guided the research. The study used descriptive research design whereby questionnaires were used to collect primary data. Proportionate sampling technique was applied to select the required sample size. The sampling frame was proportionately calculated as per the sub-counties population in the 2019 Census using a sample of 100 firms. The study applied panel random effect regression model. Statistical Package for Social Sciences STATA, was used to analyse the data. Multiple regressions was applied for analysis of data. The study established that costs of credit, terms of credit and financial knowledge significantly influence the performance of small scale farmers in the county while money market has insignificant influence. Other factors that influence the performance of small scale farmers are education level and account ownership. The study recommended that financial institutions should lower lending rates to small scale farmers to enable financial flow in order to enhance crop yield and spur economic growth for the farmers and Kenya at large. Further, the financial institutions should provide credit at affordable terms by extending repayment period to allow the farmers to harvest their produce, sell and then make repayment. Further research should be carried out in other counties to determine which factors influence crop production to promote food security and accelerate economic growth. Further studies should also be done to determine what contributes to low agricultural yield, even though Kenya is considered to have a well-developed financial sector to support agricultural production. Lastly, research should be done to determine the insignificant influence of money market on the performance of small scale famers in Kenya and how it can be harnessed to increase agricultural productivity.
Key Words: Money Market, Cost of Credit, Terms of Credit, Financial Knowledge, Finance
CITATION: Njui, W. N., & Koori, J. (2023). Access to capital finance and performance of small scale farms in Nyandarua County, Kenya. The Strategic Journal of Business & Change Management, 10 (4), 1226 – 1239. http://dx.doi.org/10.61426/sjbcm.v10i4.2813
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DOI: http://dx.doi.org/10.61426/sjbcm.v10i4.2813
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