An Economic Analysis of the Impact of Microcredit on Livelihood of Small Farmers in Rwanda

Abstract

Microcredit is expected to play a critical role in agricultural growth and become very important newlineaspect for poverty reduction in developing countries. Access to credit by small farmers newlinehouseholds helps them to increase their life of standards. However, despite the important efforts newlinemade by the Government of Rwanda to implement microfinance institutions in rural areas, the newlineaccess to microcredit programmes by small farmers remain the key obstacles for their economic newlinedevelopment. This research study has been undertaken to analyze the factors that influence small newlinefarmers to access microcredit programmes, to assess the impacts of microcredit on small newlinefarmers livelihood in Rwanda and to examine the contribution of microcredit on women newlineempowerment in Rwanda. A multistage random sample of 300 small farmers households newlinelocated in three sectors of Huye District namely, Maraba, Mukura and Ngoma were selected for newlinethe purposes of this study. Data were collected on small farmers socio-economic characteristics newlineusing structured questionnaire. Data collected were analyzed using descriptive statistics to newlinedescribe the socio-economic characteristics of the respondents. Multinomial Logit model was newlineused to analyze the factors that influence small farmers to access microcredit programmes, the newlinePropensity Score Matching was used to assess the microcredit impact on livelihoods of small newlinefarmers and Probit model was used to examine the contribution of microcredit on women newlineempowerment in Rwanda and to identify the factors that influence women to access microcredit newlineprogrammes. newline