This assignment was done by a student of Mocu in viewing the economic activities found within the ghona village at the chekereni market
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A
FIELD REPORT ON ACCESS TO FINANCE FOR SMALL HOLDER FARMERS IN GHONA VILLAGE.
ABSTRACT:
This report has aimed at examining the accessibility
of financial services particularly the farmers conducting the agricultural
business within the rural societies at large. Specifically, the report focused
on Ghona Village, in Chekereni in Moshi District. The concerned individuals
involved were all road-side business participants (whereby only women were the
ones found at present) at the study area who were been interviewed. The
information was collected through the use of interview schedules (mostly open interview),
observation focused group discussion and documentary review. The findings of
the study revealed that financial services accessibility in Ghona village at
general, is poor in general where as to quick access to cash money is through
mobile banking such as the mpesa tigo pesa and airtel money and also the
financial services like loan and credits are available through informal
organized cooperative societies which were particularly the VICOBA’S and the
TUPENDANE COOPERATIVE SOCIETY. The findings however showed that the financial
services are crucial and have a significant role in empowering, improving, and
developing the agricultural business activities of the several individual households.
There were challenges and opportunities arising from the accessibility of such
financial services to the Ghona village residents. Some of the opportunities
that emerged as a result of scarce financial services is the result of the
establishment of local cooperative societies i.e. VICOBA (Village cooperative
Bank Associations) and TUPENDANE COOPERATIVE SOCIETY which they have
facilitated to the accessibility of small credits to business women and local
farm business men individuals within the Ghona village at Chekereni. The main
challenge which has commonly been observed in the accessibility of such
financial services is that such cooperative societies are mostly operated by
women and also managed by the women therefore they exclude the interests of
business men (they don’t entertain the demands of men at all) With the above
findings, the study recommends that district commercial/business officers
should coordinate and facilitate education particularly the financial education
in financial accessibility development and product development and skills development
for the agricultural sellers in the area. Also, there is a necessity of
establishing a financial institution in the area. Moreover, business
environment should be improved for the better health of customers as well as individual
sellers. Finally, different agricultural promoters, trainers, facilitators, planners,
decision makers and educators should undertake a thorough study throughout the
country where there are several challenges and opportunities equivalent to this
kind which has been observed in Ghona village due to its significant impact from
the individual household level to the nation at large.
Key
Words: Access to finance, Small holder farmers, financial
impact.
INTRODUCTION:
General background information:
Small-holder
farmers' access to finance has remained one of the major obstacles to an
agricultural revolution and the speedy eradication of poverty in society.
Unexpected
hindrances arising from the agricultural process, such as dependency on
rainfall and poor farming systems have been making lending facilities hesitate
to disburse loans to farmers for large-scale investments to boost productivity.
A land title is one of the essential prerequisites for loan qualification set
by the lending institutions, but which has been denied to most small-holder however it’s a very bureaucratic the process
in general of obtaining the land title in general for an individual within the
Tanzanian Country.
Considering Ghona village as a case study which is
located in rural area within the Kilimanjaro region where social services are
scarce comparing to the urban areas, it is famously known for a variety of
small business activities particularly the agricultural produce as business
products. However financial services
accessibility is limited to local informal cooperative societies. It is comprised with a population of
approximately 2,600 residents residing in such a particular village. Chekereni is the name of the market famously
known practicing the selling and buying activities of the agricultural
products.
Most of the villagers in Ghona village are
peasants. There is only a single
institute that facilitates the agricultural activities improvement known as
(KADC ) i.e. Kilimanjaro Agricultural Development Centre mainly initiated as a
project foundation with the support from the government. It was established in 1994 by the ministry of
agriculture
In spite Ghona village been faced
with a variety of challenges and difficulties to the accessibility of finance
to their small holder farmers, Tanzania in general has established a conducive
various strategies and policies favoring the such interest of smallholder
farmers at general. Such policies are
like the VISION 2025 – whose purpose is to ensure food self-sufficiency and
food security, Mini-Tiger plan 2020 - whose purposes are such as (One village
one product program (OVOP) Cash crop Special Economic Zone program, National
Strategy for Economic Growth and Reduction of
Poverty (MKUKUTA) - Improve food availability and accessibility at
household level in urban and rural areas, and Property and Business
Formalization Program (MKURABITA) - reduce individual household poverty plus
Improve the living standard of the targeted groups
OBJECTIVES
Main
objective:
The main objective of this report
is to analyze the phenomenon and the perception on the accessibility of the
finance to smallholder farmers who are the peasants in Ghona village
Specific
Objectives:
The specific objectives of the
report rely on the areas such as
·
Analysing
the financial intermediaries presently prevailing and available in a particular
area
·
The
challenges faced upon the accessibility of finance to small holder farmers
·
Policies
initiated by the government favoring the access to finance to such smallholder
farmers
·
The
impact of finance to small holder farmers to their general livelihood at
general both the positive and negative sides
·
Proposed
agricultural market access support strategy for Tanzanian smallholder farmers.
METHODOLOGY:
A visit was made
to Ghona village at Chekereni in Khai district to collect information on
agricultural business activities and finance accessibility to small holder
farmers respectively. Interviews were
held with key informants along the value chains of respective agricultural
business activities. An interview is a conversation between two or more
people where questions are asked by the interviewer to obtain
facts or statements from the interviewee. Different interviews are also used in journalism and media reporting in various
employment-related contexts.
Types of interviews that were
conducted
Informal, Conversational interview
No
predetermined questions are asked, in order to remain as open and adaptable as
possible to the interviewee’s nature and priorities; during the interview the
interviewer “goes with the flow”.
General interview guide approach
Intended
to ensure that the same general areas of information are collected from each
interviewee; this provides more focus than the conversational approach, but
still allows a degree of freedom and adaptability in getting the information
from the interviewee.
Standardized, open-ended interview
The
same open-ended questions are asked to all interviewees; this approach
facilitates faster interviews that can be more easily analyzed and
compared. The most commonly method of
interviewing that was been used within the field
Also this report
was complemented by an observation as another aspect of the research
methodology where there were different activities taking place alongside the
road and within the farm such as the process of cleaning the dirt in carrot
products and also the spraying of insecticides within the crops at the farm as
to such information can be attained through the observation techniques.
Observation is the active acquisition of information from a primary
source. In living beings, observation employs the senses. In science, observation can
also involve the recording of data via the use of instruments. The term may
also refer to any data collected
during the scientific activity. Observations can be qualitative, that is, only the absence
or presence of a property is noted, or quantitative if a numerical value is
attached to the observed phenomenon by counting or measuring.
The
data collection exercise was followed by mixture of data collected to create
information out of it, organizing and producing this report.
Focus group discussion can also be
included as one of the methodology evolved in the collection of data of this
particular report. A focus group discussion (FGD) is a good way to gather together
people from similar backgrounds or experiences to discuss a specific topic of interest. Different business women expressed a variety
of their experiences in the performance of their daily business activities at
general in context of challenges they have been facing in their daily life
routine from time to time.
FINDINGS
Economic
activities performed by households i.e. chekereni
There are several economic
activities that have been observed taking place at chekereni. Most of such activities the main participants
are the women who play a vital role in performing their daily activities.
Selling
and buying of farm products as an economic activity.
The most common type of economic
activities which have been observed are the selling and buying of the farm
products where by such activities the main participants are women and their
business activities are been conducted alongside the road. Their customers are travelers who pass
through such a particular road going to Tanga region or even moving from Tanga
region to the Kilimanjaro region.
Example of the farm products
evolved in the buying and selling activities are mostly the vegetables
particularly such as the tomatoes, eggplants (known as nyanya chungu), okra and
onions plus the carrots. Not only
vegetables but also products like Irish potatoes and mango fruits are also part
of the farm products been bought and sold as part of an economic activity
within the Ghona village at chekereni.
Their products are some been
obtained from the farms presently available in such a particular area but in
huge part of contribution of their products is from the Mbuyuni market
available at Moshi Municipal. The
Mbuyuni products are relatively cheap hence affordable to the business women to
purchase them for reselling to the Chekereni market at the Ghona village. The mostly common products been bought from
Mbuyuni market for the reselling in chekereni market are the Irish potatoes and
the carrots.
It is a very profitable business
and a variety of women has benefitted financially from the selling and buying
of such farm products within the chekereni market at Ghona village. For instance a tin of Irish potatoes that
costs Tshs 4000 at chekereni is sold for amount of Tshs 9000 to Tshs 12000
hence a profit obtained is over a 100% which is benefiting directly the many
business women of the chekereni market at Ghona village.
The common challenges that are
accompanied with this type of economic activity from the interview that had
been conducted from the field one of the respondent commented that price
fluctuation are the main challenges facing them. The prices of their agricultural products are
never constant or even standard something which affects the growth and
development of their business activities hence failing to prosper further.
Farming
activities performed as part of an economic activity
The people or residents of the
Ghona village are peasants who have engaged into variety of farming
activities. The farming activities of
chekereni depend on rainfall, irrigation and wells as source of water hence
becoming more sustainability from time to time.
The well been used is of deep distance going below creating constant
supply of water also the irrigation system which has been created creates
constant availability of water to the plantations hence crops growing very well
in terms of their quality and quantity. Most of the crops been cultivated from
a variety of farms present at the Ghona village are mostly the vegetable crops
particularly such as the onions, cabbages, carrots, Chinese and tomatoes.
They are well organized (farmers
and peasants at general) with the support of the extension officers contribution
on the maintenance of such farms a variety of crops which have been cultivated
have continued to be sufficient from time to time. However Kilimanjaro Agricultural Training
centre (KATC) as an institute initiated through the project by the government
and the external donor funds has also played a vital role in improving the
farming activities at general performed within the Ghona village at chekereni.
An illustrated example of a farm
of onion production found in Ghona village
Challenges:
The main challenges that have
been facing the farmers of the ghona village is the fertilizer problem which is
scarce at general and very expensive.
The insects eating crops have contributed drastically in retarding the
development and growth of the farmers, (Tuta absoluta) is one of the common diseases
in Swahili known as “kantangaze” destroying different crops in the farm as no
cure has yet been established to prevent them from destroying the crops
Soil fertility is another
challenge that has been observed to the tomatoes plantations within the
farm. There is much use of fertilizers
on the land than the manure which destroys dramatically the fertility of the
soil.
Inadequate educated officials and
elites is one of another challenge facing the farmers of Ghona village. The extension officers are few i.e. scarce to
satisfy the demands of the farmers in terms of educating and improving their
cultivation activities in general so as to increase their farm products within
the market.
Carrot
processing as one of an economic activity.
Carrot processing is another
economic activity performed at the chekereni market in ghona village. It is also performed by only women. The processing of the carrot is for the sake
of removing the dirt obtained from the cultivated carrot within the farm. The stream water is the main source for
washing which is poured into the sack of a carrot and two women start shacking
the sack until the dirt washes away, the dirt mostly is inform of mud and
dust. With the way they perform such an
activity you may be inspired because they almost look like men doing such an
activity they are very strong and powerful.
The reason why women instead of men as been interviewed from the field
one of the women commented that men prefer selling on shops than engaging into
the processing of such carrots. They
don’t value such an activity at all. They
don’t see its worthiness to their improvement in their livelihood economically
and socially.
Using a sack saves time and
simplifies the bulkiness load of the carrots within a sack than cleaning such
carrots by using a hand. And such
carrots durability is maintained through the sacks as few drains of water remain
in the sack preserving the dry condition of a carrot. However the healthy concern of the water been
used is not favorable as the stream water pouring from the highland is the one
been used therefore worm diseases in such crops can be presently available. Someone in the highland may urinate on such
water and still the same water can be used in cleaning such carrots with or
without their knowledge.
An illustrated diagram of women
cleaning the dirt in carrots as a way of processing it.
Lending
and credit provision as an economic activity
Lending and credit provision is
another economic activity been observed within the ghona village. Different individuals have managed to build
up several cooperative societies mostly the informal and local ones for the
sake of been able to obtain a loan and support each other as member of the
groups in lending activities.
MWANGAZA
SACCO'S
is one of a cooperative society mostly favoring the interests of business women
alongside the road in lending and credit provision activities. Members are the business women alongside the
road. They do not entertain the external
members whose residents are not permanent in their ghona village. And each member is well known in such a
cooperative society in terms of the household members and the type of business
activity she daily conducts at chekereni market in ghona village.
Village Community Banks are also
small cooperative societies which are informal prevailing within the Ghona
village. The members are also the women
who also assist each other in financing themselves from time to time.
TUPENDANE
SACCO'S GROUP
is another cooperative society that was observed engaging in the economic
activities of lending and credits in particular. It was established from year 2008 up to
present. Such a group has developed further and even established its own
shop. This shop is where members buy
basic needs such as oil, flour at lower price where as the group in general
obtains the profit from such shop which in later it is been redistributed among
members. (They call it duka la
mkononi). This group is comprised of 37
members who are women mostly. Their
objective is to support each other i.e. the members in ups and downs of the
life struggles particularly the economic hindrances that face every individual
Such group does have a
constitution guiding them in performing their daily activities. The members also do engage in cooking
activities at different areas within the Ghona village at chekereni.
Rural
financing in Tanzania basing on Tanzanian rural areas with accordance of Ghona
village at chekereni
General framework of Agricultural Finance within Tanzania
Tanzania’s
economy is widely occupied with agricultural activities, with over 78% of the
working population relying on this sector. Agriculture contributes a sizeable
proportion of the GDP (over 27%), a major source of foreign exchange earnings
(over 30%) and food security. Besides its importance to the economy and
people’s livelihood, the sector continues to face sustainable growth hindrances.
One of these limitations is lack of financing.
Agricultural
finance in Tanzania has traditionally been limited to providing credit to large
agricultural producers and processors. Little emphasis has been to small scale
farmers particularly in the provision of credit, insurance and payments
facilities.
However
there are different measures that can be likely applied to improve the welfare
of agricultural financing within the rural population:
·
Monetising
surplus agricultural production (over and above what farmers need to feed their
households) to provide cash that can service other needs.
·
The
need for increased investment in assets and other mechanisms that increase
agricultural productivity, e.g. small-scale irrigation and processing for value
addition.
·
Development
of risk management tools and systems specific to agriculture, especially the
ones with relevant methodologies and those synchronies the financial service
requirements with agricultural cycles (e.g. warehouse receipts and related
insurance products).
It
is important to note that the success of agricultural finance is also closely
linked to other factors. Also it has been observed that other factors affecting
agribusiness apart from financing are access to infrastructure (e.g. roads,
connectivity, water and irrigation etc.) markets, information (financial
advisory resources, usage of credible business advisory resources, and exposure
to appropriate agricultural advice/support) and social capital (access to group
networks and support structures). Therefore the success of agricultural finance
is closely linked to the access farmers have on those aspects.
Financing accessibility
perspective in rural areas:
The
majority of the Tanzanian population (over 78%) leaves in rural areas engaging
in various economic activities including agribusinesses. However, according to Fin
Scope 2009 over 60% have no access to financial services.
The
strategic priorities in this area are to build capacity of the communities and
institutions to innovate and explore the possibilities for linkages in the
agribusiness value chain. This aims to build sustainable systems at the grass
root level.
The key driver on this area is support of the
informal financial institutions (IFIs), popularly known as “savings groups”.
The
IFIs are channels such as Village Savings & Loan Associations (VSLAs),
Village Community Banks (VICOBAs), Savings & Credit Associations (SACAs),
and Rotating Savings & Credit Associations (ROSCAs). It is evident that the
IFIs are important in the Tanzania financial market, particularly in terms of
outreach, relevance and convenience in the rural areas. According to Fin Scope
Survey (2009), a larger percentage of the population (27%) relies on informal
channels compared to the formal channel (12%) for financial access.
In
an effort to organize IFIs and rural finance growth, the government and nongovernmental
organizations have over the years been supporting initiatives to build capable
informal financial institutions in the country particularly within the rural
areas.
Financial record keeping in rural context
at Ghona village in Chekereni
The
level of education of the most peasants and business women at Ghona village are
standard seven leavers. They are not
well educated to have financial knowledge on recording appropriately the
financial activities in terms of their profits, their cost of production and
revenue generated from time to time so as to analyze the trends of finance
whether if it is profitable.
Also
most of the graduates neglect taking their career in rural areas due to such an
area having scarce social services hence making most of the elite professionals
of finance activities residing in the urban areas rather than them living in
the rural areas.
Summary
and conclusion:
Summary:
The economic
activities in general from the study area has a potential contribution on
socio-economic and livelihood development to the individuals concerned although
finance act as a blood to stir up to prosperity of all such mentioned economic
activities.
Also as it has been
analysed the business is age perceptive but not gender perceptive. It is age
perceptive in a sense that it involves people of at least all age groups
(working age group). This has revealed that even elders and youth can
participate in the business. But it is gender based since men seem to be not
involved in the business by having a perception that the business belong to
women and not otherwise.
The findings of this
study have revealed the difficulty economic condition prevailing within the
rural society in accessing a variety of the financial services. The selling of
vegetable business at Chekereni area and farming activities have socio-economic
importance since from the business, people have been able to purchase land,
take care of their families, send their children to school, build houses, and
invest in several other assets at home.
It was also revealed
that the business was part and parcel of the weapon to food insecurity in the
study area. Most of the village members were assured of availability,
accessibility as well as affordability of food. Through farming activities
people in the study area have also managed to have access to other
socio-economic opportunities like increased social capital, business networking
with other people within and outside the village. They have also access to loan
opportunities hence improving the accessibility of financial services to small
holder farmers through the formation of informal cooperative societies as well
as having business (entrepreneurial) education provided by Opportunity Tanzania
located in Moshi Municipality.
Respondents have
proposed several issues for the improving vegetable business not only in the
area but this can also be applied somewhere else in the country. Some of the
issue proposed included: providing them with financial training programs on
entrepreneurial skills, market accessibility easy access of loan for business
expansion especially for external market accessibility and education in
business ethics.
Recommendations
The private sector and the
government in general should establish several financial intermediaries in
rural areas that favor the interests of rural individuals for example at Ghona
village there is no any commercial bank presently active over there.
Also improving the presently
performing financial organizations particularly the informal cooperative
societies through provision of subsidies and credit so as to develop and grow
more in their involvement of their financial activities.
Gender equality should be
observed since men also have their significance in improving and developing the
economic financial prosperity of the society in general within the Ghona
village at chekereni.
Conclusion:
Agriculture in Tanzania is
profitable and there are several individuals who have managed to become
potential entrepreneurs and big owners of different assets due to their
involvement in the agricultural activities.
If the finance accessibility is well improved at rural areas
particularly within the Ghona village it is most likely to have a profound
number of business men and women becoming rich and richer due to their
engagement of several agricultural activities practiced within the rural areas.
References:
Komba,C.L. & Hizza,E.L. (2014) Livelihood implications of rural
communities: A case of vegetable
business at chekereni area, Moshi district. Vol. 2, Research Report series –
MUCCOBS
Financial Sector Deepening Trust (FSDT) Agriculture and Rural Finance
Towo, N. and Kimaro, P. (2013)
Warehouse Receipt System: A Solution towards Smallholder Farmers Financial
Constraints, Vol. 2 Muccobs Working Paper series
IFAD, Independent Office of
Evaluation (2011). Rural Financial Services Programme and Agriculture Marketing
Systems Development Programme. Interim Evaluation IFAD
Interview definition – Wikipedia
Tanzania: Small-Holder Farmers'
Access to Credit Remains Difficult. Tanzania Daily news
