Factors affecting access to agricultural credit and the size of agricultural credit for smallholder farmers in Zimbabwe

Access to agricultural credit is essential for increasing the productivity and livelihoods of smallholder farmers in Zimbabwe. Nevertheless, persistent systemic challenges constrain access to and the amounts of loans available to the farmers. This study explores the key determinants of access to agricultural credit and loan amounts offered to farmers in Mashonaland East province. Using a double-hurdle model, the study analyzes the decision to apply for credit and determinants of loan amounts obtained. Findings indicate that farm size, age, membership in savings groups, and financial literacy are significant factors in credit access, while collateral requirements and perceived risk remain significant barriers. Larger farms and savings group membership were positively associated with loan sizes. The research highlights the need for inclusive credit policies, flexible collateral conditions, and digital financial services to bridge the financing gap. Overcoming these challenges is crucial in fostering financial inclusion and developing the agricultural sector in Zimbabwe.