This paper explores the contribution of social capital on the rural household food security. Social capital is the ability of community actors to secure benefits by virtue of membership in social networks or other structures. In the past decade, consensus has emerged among scholars and practitioners of development that social capital can contribute significantly to the alleviation of poverty. Food insecurity is an indicator of poverty. This paper therefore takes this view by investigating the impact of social capital on the food security situation of rural people in developing countries, using the case study of Malawi in Sub-Saharan Africa. Using household survey data different social capital variables were incorporated into the household social welfare model, controlled by human capital, physical capital, household and geographical characteristics in order to test the linkage between social capital and rural household food security situation in the context of a developing country. Household food security status was improved by membership to farmers' organizations, household network size and engagement in voluntary activities. When all social capital variables were incorporated into the model the explanatory power of the model improved by 20% on household food security.We conclude that social capital has positive influence on household food security; however, the effects vary depending on the nature of social capital. The results indicate the significance of social networks in improving the socio-economic livelihoods of the people in rural areas in developing countries.

ABSTRACT

<p>The emergence and proliferation of Microfinance Institutions (MFIs) in Malawi gave rise to the need for empirical research to assess their role on growth of small-scale agribusiness entrepreneurs. The paper gives the details of the results of a study which was conducted in Malawi to analyze the role of microfinance on the growth of small-scale agribusinesses in Lilongwe District. A financing constraint approach was applied using logit model to determine factors affecting investments of small-scale agribusiness entrepreneurs. The approach stipulates that entrepreneurs in areas with significant presence of MFIs (unconstrained) rely less on internal funds (average profits) for their investment decisions than areas with limited presence of MFIs (constrained). A T-test was also used to compare investment levels of unconstrained and constrained firms to support the results obtained from the financing constraint approach.</p><p>Loans were among the products which were found to be offered by MFIs although their accessibility was affected by, among others, high interest rates. The logit model revealed that for each additional profit the probability of investment decreased by 46 percent in constrained firms and 39 percent in unconstrained firms. However, the T-test results revealed no significant difference in levels of investments between unconstrained firms and constrained firms. These results show no significant role of MFIs on growth of small-scale agribusiness entrepreneur. The results have insinuated the review of MFI loans conditions such as interest rates if they are to have a significant role on growth of small-scale agribusiness entrepreneurs.</p>

<p>The study was conducted to determine the effect of microcredit on financial performance of small scale cooking oil processors in central Malawi. Adopting a mixed research approach, the DuPont identity was used to compare the financial strengths and weaknesses between businesses that acquired a microcredit and those that did not. First, the study found that small scale cooking oil processing is a profitable business, regardless of their status in microcredit acquisition. However, microcredit had mixed effects on the financial performance of businesses. Microcredit improved the level of business capital for the businesses translating into better production efficiency, competitiveness and acquisition of a market share thus positively contributing to financial performance. On the other hand, microcredit increased the debt equity ratio hence increasing the businesses’ risk of default. The study recommends the businesses to further improve production efficiency and net asset turnovers. In addition, small and medium scale businesses ought to prudently contract microcredit in order to enhance their financial performance whilst checking for their risk of financial distress.</p>

Social capital relates to capital created when a group of individuals or organizations develop the ability to work together for mutually productive gain. Gains in economic performance and innovative capacity depend on the institutional effectiveness of these relationships as measured by the available stock of social capital. Studies on social capital have however, been criticized for failing to account for the multi-dimensional and latent nature of the concept. Using household survey data from Malawi, this study uses latent class analytical methods to explore social capital and how it relates to welfare of people in rural communities in Malawi in Africa. It highlights the usefulness of latent class analytical methods for providing statistically valid information about the characteristics and determinants of social capital. Using the social capital dimensions of trust, participation and volunteering a four class LCA typology was constructed. Around 30% of the sample were classified as 'trusty participants', reporting active participation in the socio-economic activities of their communities and a high degree of community and institutional trust. Multinomial logistic regression revealed the covariates of the different typologies of social capital.