Credit Facilities and Growth of Large-Scale Sugarcane Farms in Migori County, Kenya

Abstract

Over the past decade, the sugar sector in Kenya has been facing decline with numerous sugar production companies forced to close down. One of the factors leading to the closure of the sugarcane factories is the low crushing level due to inadequate cane supply. Successive governments have put in place policies and measures to ensure growth in the levels of cane production with little or no results. The lack of growth in the production of sugarcane has been attributed to numerous factors with lack of access to credit facilities being one of the major challenges. The purpose of the study was to determine the effect of credit facilities on growth of large-scale sugarcane farms in Migori County, Kenya. The study was anchored on: life cycle theory, loan able funds theory, and the theory of financial intermediation. The study adopted descriptive cross-sectional research design. The target population of the study was all the large-scale sugarcane farmers in Migori County, Kenya. The study adopted purposeful sampling technique to pick respondents. The study collected data using questionnaires. The data was analysed using descriptive analysis and multiple linear regression analysis. The study found that the nature of credit had a positive but insignificant effect on growth. In addition, the study established that access to credit has a positive and significant effect on growth whereas the terms and conditions of credit were determined to have a negative and significant effect on the growth of large-scale sugarcane farms in Migori county, Kenya. The study concluded that the type of financial institution offering credit was not relevant to the growth of the farms; the farmers preferred long-term credit to finance their growth; the terms and conditions attached to loans and the processing of the loans were impediments to access to credit and subsequently curtailed borrowing.