Abstract:
This study aimed at exploring constrains facing smallholder farmers to access credit. The study addressed the following question: why smallholder farmers face difficulties in accessing loan from formal financial institutions in Tanzania? This study was carried out at Dakawa ward in Mvomero district, Morogoro region involved 120 smallholder famers. Descriptive analysis was used to understand why smallholder farmers face difficulties in accessing to credit. It was established that lack of collateral, lack of exposure to financial services among smallholder farmers, high interest rates, complicated loan bureaucracy, and lack of formal financial institutions-commercial banks in Tanzania rural settings (loan lenders are not located nearby the farmers setting) as the main challenges that hampers farm entrepreneurs to acquire loans. There are little prospects for farmers particularly the small farmers who use traditional methods unless they become more entrepreneurial in managing their farms. They have to cultivate and produce for market and make profits. For the survival of small scale farming, there is a need of entrepreneurial mind-sets among smallholder farmers and a helpful hand from the government, formal financial institutions and other agricultural stakeholders. Assistance from extension workers, financial and other supporting institutions is needed for small scale farmers to become successful entrepreneurs. Farm entrepreneurs need access to finance (credit), agricultural inputs, reliable market, business networks and instant information to succeed and remain afloat.
