The contribution of warehouse receipt system to creditaccessibility in Babati district, Tanzania
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Date
2020
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Publisher
Sokoine University of Agriculture
Abstract
This study examined how Warehouse Receipt System (WRS) has assisted Small Scale
Farmers (SSFs) to access credit from financial institutions in Babati district, Manyara
region. Experiences from 100 farmers who have used WRS in Qash and Magugu villages
were gathered using a structured questionnaire to specifically find: SSF understanding on
credit accessibility through WRS, effectiveness of WRS to credit accessibility.
Furthermore, checklist was employed to find the number of SSF credited and benefits
obtained. Finally, to recommend what should be done to make the system beneficial to a
large number of farmers. Purposive technique was used to select two villages and simple
random sampling was employed to obtain 100 respondents. Descriptive statistics was used
to analyze the data. The results indicated that WRS is effective in linking SSF to financial
institutions. Three hundred eighty four SSFs in villages of Magugu and Qash were aware of
the system and had access to WRS. Ninety nine percent of the respondents had accessed
credit from commercial banks. Ninety nine out of 100 respondents reported that credit has a
significant role to play in improving livelihood of rural people. Credit accrued enabled 28
respondents in house construction and 24 afforded health and education services.
Moreover, 18 respondents had access to agricultural inputs while 12 respondents initiated
small business enterprises. These justify encouragement of credit to rural people. The
following recommendations were put forward: first, the Government of Tanzania should
take a deliberate effort to promote and replicate WRS in other regions by involving a wide
range of crop varieties. Second, the government is advised to improve infrastructure (roads)
that connect villages, district headquarters to main roads in order to speed up crop
production and productivity. Third, to stabilize prices of farm produce to safeguard the
SSFs. Credit providers to SSFs are urged to reduce interest rate to encourage SSFs to
borrow from them. Adding value to farm produce is of crucial importance to assist farmers
to fetch good prices for their produce.
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Keywords
Warehouse receipt system, Small Scale Farmers, Financial institutions