Technological Factors and Utilization of Formal Financial Services by Smallholder Farmers in Kenya
Financing agriculture has become a critical service in enabling the full realization of the agricultural sector’s potential. The allocative efficiency of financial services provided by financial institutions in Africa to the agricultural sector remains low. Further, several institutions aimed at facilitating small holder farmers’ access to credit have failed to deliver it at the right time and in the right proportions. Nevertheless, in the advent of new financial regimes and innovations such as financial technology, the uptake and utilization of financial services among the small holder farmers in Kenya was expected to increase. This, however, has not been the case. Hence this study which sought to determine the influence of technological factors on the utilization of formal financial services among small holder farmers. The target population for this study was small holder farmers from Nakuru, Busia and Kirinyaga Counties in Kenya. A study sample size of 496 small holder farmers was obtained through purposive and stratified random sampling techniques. Data was collected using researcher developed questionnaire. Quantitative data was analyzed using multiple linear regression analysis with the aid of stata. The findings revealed that technological factors did not have any significant effect on utilization of formal financial services among small holder farmers. This was because the farmers were yet to appreciate and fully take advantage of technology enabled financial services to increase their levels of inclusion. From the findings of the study, the recommendations were that at the national level, policy makers should encourage more investment in the digitalization of small scale farming activities so as to encourage more technology adoption.
Joseph Masinde Wabwire,
Technological Factors and Utilization of Formal Financial Services by Smallholder Farmers in Kenya, International Journal of Finance and Banking Research.
Vol. 5, No. 3,
2019, pp. 55-63.
Meyer, R. L. (2011). Subsidies as an Instrument in Agriculture Finance: A review. A Review. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/12696 License: CC BY 3.0 IGO.”
World Bank. (2008). Finance for All? Policies and Pitfalls in Expanding Access. Washington, DC: World Bank.
Demirguc-Kunt, A., & Klapper. (2012). Measuring Financial Inclusion: The Global Findex Database, World Bank Policy Research Working Paper: 6025.
Finacess, (2016). The 2016 FinAccess Household Survey on Financial Inclusion. Nairobi, Kenya.
Dayadhar, R. S. (2015). Financial Inclusiveness: The Role of Mobile Money and Digital Financial Services. Socrates, 3 (1), 95-112.
Asian Development Bank (2016). Digital Financial Services in the Pacific Experiences and Regulatory Issues. Mandaluyong City, Philippines: Asian Development Bank.
Villasenor, J. D., Darrell M. W. & Lewis, J. R. (2015). The 2015 Brookings Financial and Digital Inclusion Project Report: Measuring Progress on Financial Access and Usage. Washington, DC. Center for Technology Innovation.
Radcliffe, D. & Voorhies, R. (2012). A Digital Pathway to Financial Inclusion. Bill & Melinda Gates Foundation. Electronic copy available at: http://ssrn.com/abstract=2186926
McKee, K., Kaffenberger, M. & Zimmerman, J. M. (2015). Doing Digital Finance Right: The Case for Stronger Mitigation of Customer Risks. Focus Note No. 103. Washington, D. C. CGAP.
European Investment Bank. (2014). Digital Financial Services in Africa: Beyond the Kenyan Success Story. European Investment Bank.
Garner, E., & de la O Campos, A. P. (2014). Identifying the “Family Farm”. An Informal Discussion of the Concepts and Definitions.
Causin, B. (2010). What is a ‘Smallholder’?Class-analytic Perspectives on Small-Scale Farming and a Grarian Reform in South Africahttps:// www.africaportal. Org/dspace/articles/what-smallholder - class-analytical perspectives - small- scale-farming-and-agrarian
Chamberlin, J. (2008). It's Small World After All: Defining Smallholder Agriculture in Ghana, 823: Intl Food Policy Res Inst.
Goodhue, D. L., & Thompson, R. L. (1995). Task-Technology fit and Individual Performance. MIS quarterly, 213-236.
Zigurs, I., Buckland, B. K. (1998). “A Theory of Task-Technology fit and Group Support System Effectiveness’, Management information system Quarterly, Vol. 22, No. 3, pp. 313-334.
Gebauer, J., & Shaw, M. J. (2004). Success Factors and Impacts of Mobile Business Applications: Results from a Mobile e-Procurement study. International Journal of Electronic Commerce. 8 (3) 19-41.
Perry, M., O’Hara, K., Sellen, A. Brown, B. & Harper, R. (2001). Dealing with Mobility: Understanding Access Anytime, anywhere. ACM Transactions on Computer-Human Interaction, Vol. 8, No. 4, pp, 323-347.
Gebauer, J., & Ginsburg, M. (2006). Exploring the Black box of Task-Technology fit. Communications of the ACM.52 (1), 130-135.
Turel, (2006). Satisfaction with mobile services in Canada: An empirical investigation. Telecommunications policy, 30 (5-6), 314-331.
Yuan, Y., & Zheng, W. (2007). Identifying the differences between stationary office support and mobile work support: a conceptual framework.
Junglas, I. A., & Watson, R. T. (2006). The u-Constructs: Four Information Drives. Communications of the Association for Information Systems. (17). 569-952.
Lyytinen, K. & Yoo, Y. (2002) “Issues and Challenges in Ubiquitous Computing”, Communications of the ACM, 45 (12), 63-65.
Kirui, O. K., Okello, J. J., & Nyikal, R. A. (2012). Awareness of Mobile Phone-Based Money Transfer Services in Agriculture by Smallholder Farmers in Kenya. International Journal of ICT Research and Development in Africa (IJICTRDA), 3 (1), 1-13.
Salami, A., Kamara, A. B., & Brixiova, Z. (2010). Smallholder Agriculture in East Africa: Trends, Constraints and Opportunities: African Development Bank Tunis.
Duncombe, R. (2012). An Evidence-Based Framework for Assessing the Potential of Mobile Finance in Sub-Saharan Africa. The Journal of Modern African Studies,50 (03), 369–395.
Porteous, D. (2007). Just how transformational is m-banking, ‖. Commissioned by Finmark.
Pulver, C., Jack, W., & Suri, T. (2009). The performance and impact of M-PESA. FSD Kenya.
Beck, T., & Maimbo, S. M. (Eds.). (2012). Financial Sector Development in Africa: Opportunities and Challenges. World Bank Publications.
CBK, (2009), Central Bank of Kenya Annual Report 2009, Nairobi, Kenya.
Johnson, S., & Arnold, S. (2012). Inclusive Financial Markets: is Transformation Underway in Kenya Development Policy Review, 30 (6), 719-748.
Sorensen, H. (2015). Structural social capital, household income and life satisfaction: The evidence from Beijing, Shanghai and Guangdong-Province, China. Journal of Happiness Studies, 17 (2), 569-586.
Kikulwe, E. M., Fischer, E., & Qaim, M. (2014). Mobile Money, Smallholder Farmers, and Household Welfare in Kenya. PLoS ONE,.122 (3), 879–924.
Michelle, (2014). The Effect of Digital Finance on Financial Inclusion in the Banking Industry in Kenya. Financial and Quantitative Analysis, 1 (2), 26-29.
Lawrence, M., King, A. & Holt, J. (2011). The Practitioners Guide to Household Economy. Approach. Retrieved on 01/11/2017from: http://www.feg-consulting.
Communications Commission of Kenya, Annual Report for the Financial Year 2014–2015; www.ca.go.ke/index.php/ annual-reports.
Wesolowski, A., Eagle, N., Noor, A. M., Snow, R. W., & Buckee, C. O. (2012). Heterogeneous mobile phone ownership and usage patterns in Kenya. PloS one, 7 (4), e35319.
Demirgüç-Kunt, A., Klapper, L., Singer, D., & Van Oudheusden, P. (2015). The Global Findex Database 2017. Measuring Financial Inclusion around the World. World Bank Policy Research Working Paper, (7255).
Dupas, P., & Robinson, J. (2013). Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya. American Economic Journal: Applied Economics, 5 (1), 163-192.
Karlan, D., Kendall, J., Mann, R., Pande, R., Suri, T., & Zinman, J. (2016). Research and impacts of digital financial services (No. w22633). National Bureau of Economic Research.
Simiyu, W., Stevie, M. N., & Benson, A. M. (2012). Gender Empowerment and Access to Financial Services in Machakos County, Eastern. Journal of Modern African Studies, Vol. 30, No. 1., pp. 163-175.