Smallholders' access to and demand for credit and influencing factors: policy and research implications for Ethiopia

Lack of access to appropriate credit services has been recognized as one of the major obstacles in transforming the subsistence-oriented smallholder agriculture sector. Focusing on individual farm households and SMEs, various studies attempted to examine farmers' and small firms��� loan demand and access and influencing factors. Research on the level of access and demand for credit and its determinants among farmers' co-operatives in the African context is scanty. This article aims to address this information gap particularly in relation to the Ethiopian smallholder farmer cooperatives context. The paper is based both on critical review of existing literature and empirical study from Ethiopia. The findings reveal the presence of appreciable gaps not only between credit demand and access, but also between potential and revealed demands. The study argues that apart from the supply side gaps, demand side constraints and other external factors also play an important role in influencing farmers'/cooperatives' access to and demand for credit services. The paper finally draws lessons and implications for policy and research.