Determinants of microcredit and agricultural investment among small farming households in southern province of Rwanda: the case of Huye District

Small farmer access to microcredit programmes has been a major constraint to agricultural development in developing countries. Agricultural investment is observed with an aim of addressing major challenges in the rural areas in order to achieve long-term development objectives. Investing in agriculture through microcredit should increase income and improve production of small farmers. This study examines the use of microcredit programmes among small farmers in Rwanda. It also assesses the factors affecting small farmer’s decision to participate in microcredit programmes in Huye District, Rwanda. Primary data was randomly collected using structured questionnaire from 300 small farmers in Maraba, Mukura and Ngoma Sectors of Huye District, Rwanda. Data was analyzed using descriptive analysis and Logit regression. The results from descriptive statistics show that more women small farmers had participated in microcredit programmes than men small farmers. The results shows also that the main purpose of agricultural loans were to buy seeds and fertilizers, to invest in irrigation, to improve in agricultural investment and to enhance agricultural development. The results from Logit model indicated that education, household size, total annual income, cooperative membership and distance are significant variables that influence small farmers’ participation in microcredit programmes. Therefore, providing credit to the small farmers could increase their agricultural production and reduce poverty. The implication of these findings is that there is a need to invest in agriculture in order to increase the standard of living of small farmers and food supply in Huye District.