Determinants Of Credit Access Among Smallholder Tea Farmers In Kericho County, Kenya

Abstract

Tea is Kenya’s leading foreign exchange earner, contributing approximately 23% of total export earnings in 2023. The tea industry has potential for further economic development as global tea consumption continues to grow. In Kericho County, smallholder tea farmers face persistent challenges in accessing financial services despite the presence of several credit service providers. There was inadequate empirical evidence on the determinants of credit access among these farmers. This study analyzed the determinants of credit access among smallholder tea farmers in Kericho County, Kenya, and examined the effect of credit access on farmer performance. A total of 150 respondents were sampled from 109,401 growers across 11 tea factories using multistage sampling and structured questionnaires. The study was guided by Rational Choice Theory and adopted an explanatory research design. Binary logistic regression tested the determinants of credit access, while multinomial logistic regression analyzed the relationship between credit access and farmer performance. Farm characteristics, particularly land size (p=0.003<0.05, b=1.058) and number of tea bushes (p=0.000<0.05, b=0.001), significantly influenced credit access. Among farmer characteristics, gender (p=0.003<0.05, b=2.411) was significant, with female farmers having greater access to loans. Farming experience (p=0.014<0.05, b=-0.254) was also significant;

experienced farmers were less likely to seek loans, possibly due to reliance on self- financing. Age (p=0.063>0.05), education level, savings culture, and farming

income were not statistically significant predictors of credit access. Farm activities including crop types and collateral use were similarly non-significant. Access to credit positively influenced productivity, tea quality, and earnings. The study is significant in that it provides empirical evidence to inform policymakers, financial institutions, and KTDA in designing targeted credit solutions for smallholder tea farmers, a population critical to Kenya’s export economy yet under-served by formal credit systems. The study concludes that land size, number of tea bushes, and gender are the key determinants of credit access, and recommends enhancement of financial literacy programmes and targeted credit products for male farmers and those with limited landholdings to promote equitable growth in the tea sector.