An Assessment of the Impact of Tobacco Industry Credit Policies on the Productivity of Small-Scale Farmers in Zimbabwe

Abstract

The study aimed to investigate the impact of tobacco industry credit policies on the productivity of small-scale contracted growers in Zimbabwe. The study sought to examine the extent to which timeliness of funding affected the productivity among small-scale tobacco farmers, determine how the level of funding affected their productivity, the extent to which repayment schedules affected productivity, the extent to which interest rates affected productivity, and to suggest strategies to improve the productivity of small-scale tobacco contract growers. The study adopted a mixed research approach, with quantitative data being collected from a simple random sample of 75 respondents through a researcher-designed self-administered questionnaire. Interviews were used to generate qualitative data from a purposive sample of 8 interviewees. Quantitative data was analyzed using SPSS, and the qualitative data was analyzed using the thematic approach. The findings of the study indicated a negative relationship between the timeliness of funding and annual tobacco yields (r= -.014, p   >.05), timeliness of funding for tobacco growers and their financial status (r= -.042, p   >.05), timeliness of funding and the farmers’ self-sufficiency (r=-.170, p>.05), timeliness of funding and perceived profitability (r= -.170, p>.05) and timeliness of funding and ability to ensure the tobacco crop (r= -.004, p>.05). There was a significant but moderately weak positive relationship between adequacy of funding and annual tobacco yields (r=.231, p<.05). There was also a moderate significant positive relationship between the level of funding and financial status (r=.391, p<.05), level of funding and (r=.413, p<.05), level of funding and self-sufficiency (r=.355, p<.05), level of funding and perceptions of profitability (r=.489, p<.05). Further results show a significant negative correlation between interest rates and food security (r=-.020, p>.050), interest rates and self-sufficiency (r=-.102, p>.05), interest rates and profitability (r=-.083, p>.05). The study recommends that to enhance productivity, the government must compel companies to review interest rates downwards. Loans granted must cover all aspects of tobacco production and livelihood costs and lower interest rates on loans granted. Ensuring timely access to loans is necessary to enhance better yields. The government must compel contracting firms to lower interest rates, and contracting firms must provide grace periods before repayment starts. Policymakers should also work closely with contracting firms to further enhance productivity. The government may explore ways to support small-scale farmers whilst protecting the contractor's interests and putting a cap on the interest rates. Future research could focus on contracting firms' perceptions regarding their contract schemes' impact on productivity among small-scale tobacco farmers in the country.