Sustainable Development Goals and Agricultural Finance

It is evident that developing countries have inadequate agricultural finance, causing considerable credit access constraints for smallholder farm households. The effects of credit access on agricultural productivity in Tanzania remain unclear. It is unclear whether agricultural finance augments agricultural productivity in smallholder farm households. In this context, this study investigates the impact of credit access on productivity in Tanzania, a developing country with weak agricultural finance and significant credit constraints. To achieve the objectives, secondary survey data from a sample of 1042 smallholder farms were used. The Endogenous Switching Regression model is adopted to address the endogeneity problem and selection bias. Propensity Score Matching was used to compare the results to ensure the robustness and consistency of the results. In both models, the results are consistent, and credit access positively affects smallholder farm productivity. Interestingly, farmers without credit counterfactuals would increase their productivity by 15.09% if there were no credit constraints. The findings have important policy implications in favour of smallholders’ access to credit, which will impact food security and poverty reduction through crop productivity augmentation, in the light of the Sustainable Development Goals (SDGs) attainment.