Credit constraints, off-farm participation and productivity; case of Kenyan rural sector

Credit constraints among smallholder farmers remain one of the impediments to the much-needed increase in agricultural productivity in sub-Saharan Africa. Applying the direct elicitation approach and using representative data from rural Kenya, we identify credit constrained farmers and assess the effect of being constrained on maize yields. Access to credit affects various variables that affect maize yields, although we do not find significant yield differences. Participation in group activities, access to financial and extension services, more education increases the likelihood of being credit unconstrained. Similarly, participating in off-farm activities reduces the likelihood of being credit constrained. Hence, policies that facilitate human capital development, such as households education, access to information, or engagement in off-farm activities- either self-employment or salaried employment, are relevant. Acknowledgement : The authors gratefully acknowledge funding from the United States Agency for International Development (USAID) and wish to thank internal reviewers at Tegemeo Institute for their valuable time and comments that greatly helped improve this work. We are also grateful to other staff at Tegemeo Institute for their comments, suggestions, and support.