The role of financial inclusion on smallholder farming performance in Zimbabwe: A case of Gokwe South District

Abstract

Financial inclusion is a major determining factor in the financial development of societies. Financial inclusion alleviates poverty, reduces income inequality and employment. Access to financial services has prompted debate to both emerging markets and advanced economies with an aim to promote economic development through functional financial systems. The purpose of this study was to determine the role of financial inclusion on smallholder farming performance in Zimbabwe’s Gokwe South District. This was achieved by identifying major financial inclusion challenges encountered by smallholder farmers and investigating how they manage their income generated from crop farming. In addition, it sought to establish how financial inclusion affects smallholder farming performance and analysed financial literacy ways to improve strategic financial decisions. Furthermore, the study investigated how commercial farming impacts on financial security of smallholder farmers in Gokwe South District. Adopting a qualitative approach underpinned by the transformative paradigm, the study followed a single case study design. The target population was 62 000 smallholder farmers. A non-probability sampling strategy was used to purposively sample five wards notably Chisina, Nemangwe and Mapfungautsi geographical zones out of 33 wards. An interview guide, focus group discussion guide and participant observation guide were tools used to collect data from eight key informants and 47 participants in focus group discussions. Based on the findings, it was established that smallholder farmers possessed seasonal bank accounts and faced challenges that financially excluded them such as withdrawal limits, exorbitant bank charges, limited use of mobile and digital banking and lack of financial sector confidence. Instead of payments for crops being made in cash, they were paid for in kind or electronically, but the electronic payments were not done instantly. Furthermore, it was established that these smallholder farmers underpriced their products, lacked financial management knowledge and record keeping, and lacked financial education, among other challenges. The study recommends the establishment of financial inclusion hubs, commercial farming among smallholder farmers, financial literacy support programmes, financial management awareness campaign, elementary financial education, provision of low-cost bank accounts, agency banking, satellite banks and agribusiness unit development. In terms of further studies, focus could be on financial inclusion of other disadvantaged members of society such as the disabled and women, use of mixed methodology study on the same subject and climate change impact on smallholder farming and business growth.