Abstract:
One of the most crucial and leading factors constraining smallholder farmers’ development in
developing countries like Ethiopia is limited access to financial capital and credit especially
from the formal lending institutions. In Ethiopia, among other things, lack of finance is one of
the fundamental problems hampering production, productivity and income of rural farm
households. This study was aimed to examine the determinants of smallholder farmer’s access to
credit: A Case of Basona Worena Woreda North Showa Zone in Amhara Region The study
adopted exploratoryresearch design and it attempts to examine the various factors (Institutional
factors, demographic factor, socio-economic factors, geographical factors that can affect
smallholder farmer’s access to credit in Basona Worena Woreda North Showa Zone in Amhara
region. A sample of 418 farming households were participated in this study and
Stata13statistical software was used to process the collected data. The logistic regression
analysisused to investigate the relationships between the factors affecting access to credit
indicate that sex of the household head, age of the household head, household size, land size,
distance to nearest market, primary occupation of the farming household heads, cooperative
membership, saving habit and extension contact were found statistically significant in explaining
farming household access to credit. Based on the finding the study recommend that credit
institutions should reduce the period for lending procedure and the costs involved in processing
loan. Awareness creation should be made for farmers at a regular basis concerning the potential
benefits of accessing micro credit and lending institutions should reduce the costs involved in
processing loan and interest rate levied on the amount lent.
