Effect Of Equity Bank’s Financial Management Training Programme On Small-Scale Farmers’ Uptake Of Credit In Makueni County

ABSTRACT

Kenya’s economy depends majorly on agricultural sector. Agriculture contributes 51 percent to gross domestic product and 45 percent of government revenue is derived from this sector. Growth in national economy is highly correlated to growth and development in agriculture. The country targets 10 percent annual economic growth and for this to be achieved small scale farming need to be up to date, innovative and commercially inclined. Financial services also need to be inclusive and meet all Kenyans’ investment needs. Small scale farmers should be able to access affordable financial services whenever they need them to finance their farm projects. However 52 percent of small scale farmers in kenya are food insecure. They depend entirely on rainfall and use tradition methods of farming limiting their production.These farmers experience difficulties in obtaining financial services and face limited access to new technology in agriculture. Equity bank in its pursuit of acquiring a sustainable competitive edge has embraced innovation of unique strategies based on empowering small scale farmers with affordable credit and financial management skills. This study aimed at assessing the effectiveness of Equity bank’s financial support services on small-scale farmers’ uptake of credit. The general objective of the study was to investigate the effectiveness of Equity Bank’s financial management training programme on small-scale farmers’ uptake of credit. The research targeted a population of small scale farmers in Makueni County. The sample size was 175 farmers. The researcher used simple probability sampling technique to obtain the sample. The instrument of data collection was structured questionnaire, which contained open and closed ended questions. The study used multiple linear regression models for data analysis. The study found that small scale farmers seeking financial services in Makueni County had acquired financial education from Equity Bank. It also found that 91.4 percent of the farmers had borrowed a loan. These loans were from different financial institutions and even informal sources like ‘chamas’. This is a clear indication that after farmers where equipped with financial literacy skills majority of them accessed credit services. From the regression analysis the coefficient of Knowledge of bank products was 0.252 .This implies that if all other factors are held constant then a unit increase in bank product would lead to 25.2 percent increase in credit uptake. A unit increase in saving would lead to 13.1 percent increase in credit uptake. Budgeting had a coefficient of 0.555. The implication is that a unit increase in budgeting would increase credit uptake by 55.5 percent Debt management had a coefficient of 0.662. This means that a unit increase in Debt management would lead to 66.2 percent increase in credit uptake. This points out that among the four modules learned debt management contributed the most towards credit uptake. The study recommends that; Government of Kenya through central bank should ensure financial management training is conducted by all financial institutions. Equity bank should extend financial management training programme to all clients of the bank. This will increase credit uptake. The farmers should attend all financial management programme sessions. This will empower them by improving access to farm credit.