Effect of Credit Facilities on Maize Productivity of Smallholder Farmers in Sumbawanga Rural and Mbozi Districts in Tanzania.

This study aimed at examining the effect of credit facilities on maize productivity of rural smallholder farmers in Sumbawanga rural and Mbozi districts in Tanzania. Specifically, the study aimed at determining the effects of (i) formal financial institutions credit (ii) semi-formal financial institutions credit and (iii) informal credit on maize productivity of smallholder farmers. This study was guided by the theory of financial intermediation and neoclassical economic growth theory. The research design was descriptive quantitative in nature where balanced panel data for the year 2018 to 2020 was used. A random effect model was used to analyse 321 sample observations. The Pearson correlation coefficient results indicated that formal financial institutions credit, semi-formal financial institutions credit and informal credit has significant and positive effect on maize productivity. Moreover, resuts for mean and standard deviation indicated that semi formal financial institutions credit and informal credit were higly accessed and highly dispersed from the mean than formal financial institutions credit. It was also revealed that a unit increase of formal financial institutions credit ratio, semi formal financial institutions credit ratio and informal credit ratio has increased maize productivity. Additionally, R-square results for the overall variation indicate that 29% of the dependent variables were being explained by the independent variable. The study concludes that independent variables are predictors of dependent variable. Thus, it is recommended that policy makers (government) should set policies that encourage the increase of financial access points, reduced transaction costs and enrolling agricultural trustworth agents in rural areas. Keywords: Credit Facilities, Small Holders, Rural Areas, Maize Productivity