Impact of village saving groups on adoption intensity of sustainable agricultural practices among smallholder farmers in Northern region, Ghana

Abstract

Purpose

Access to formal financial services is one of the main obstacles to the adoption of agricultural technologies such as Sustainable Agricultural Practices (SAPs). In order to increase financial inclusion and lessen farmers' liquidity restrictions, Village Savings and Loans Associations (VSLA) are being promoted in rural farming communities. However, there extent to which VSLA contributes to the acceleration of agricultural practices, such as SAP, remains little explored in existing literature. The objective of this study was to quantitatively assess the impact of VSLA on the intensity of adoption of SAPs.

Design/methodology/approach

This study used cross-sectional data from 376 farming households in the East Gonja district of Ghana. An Endogenous Poisson Treatment Regression (EPTR) was applied to correct for self-selection bias that might emanate from both observed and unobserved differences in household characteristics.

Findings

The empirical results indicated that farmers' engagement in non-farm economic activities, ownership of land and size of agricultural land under cultivation positively and significantly influence the intensity of SAPs adoption. Moreover, participation in VSLA improves the adoption of SAPs, and that VSLA-participants adopted about three more SAPs than they would have if they did not participate in VSLA.

Practical implications

This study re-affirmed the significance of VSLA in rural farming communities and recommend that it should be promoted as an alternative to formal financial services to enhance financial inclusiveness, and consequently boost the uptake of SAPs.

Originality/value

In the search of literature, this study is the first to estimate the impact of VSLA on adoption of SAPs. The use of EPTR helps to bring out the true treatment effects of VSLA on SAPs.

Citation

Alhassan, A.-K., Boateng, V.F. and Danso-Abbeam, G. (2023), "Impact of village saving groups on adoption intensity of sustainable agricultural practices among smallholder farmers in Northern region, Ghana", Agricultural Finance Review, Vol. 83 No. 4/5, pp. 675-690. https://doi.org/10.1108/AFR-01-2023-0001