Loan Repayment Performance on Smallholder Tobacco Contract Farmers. A Case of Ward 21 Marondera District, Mashonaland East Province

Abstract

This study examined the factors affecting loan repayment performance among smallholder tobacco contract farmers in Mashonaland East Province in Marondera District, Ward 21. The study was a quantitative research. A total of 222 respondents were administered with structured questionnaires to provide the relevant information. The information was gathered from respondents in Ward 21 Marondera District using the multistage sampling technique. A Linear regression model was applied to analyse factors that affected tobacco output and a Probit model was applied to analyse factors that affected loan repayment performance among smallholder tobacco farmers. The majority of the respondents who participated were males and they were the ones making household financial decisions. Results from the linear regression model showed that of the 9 variables that were tested, education level, tobacco land irrigation land and farm experience were significant at a 5% level of significance. Results from the probit model showed that of the 27 variables that were tested, household size, land size, experience, other loans due, other crop enterprise, loan purpose, other sources of income and side marketing were found statistically significant at a 5% level of significance. Therefore, it is recommended that the lenders pay much attention to land size, experience and the size of households of the farmers before extending credit to them as these were found to be contributing the highest variance in loan repayment performance