Effects of financing mechanisms in enhancing commercialization: The case of banana marketing in Kenya

Abstract

The initiative to promote tissue cultured banana in Kenya was taken up by several Research and Development (R&D) agencies in the last two decades with an aim of improving the income and welfare of smallholder resource-poor farmers in the region. Most interventions focused on improving production and producers’ incomes. While farmers have intensified production and are marketing their produce, little efforts have focused on development of local markets, which are vital in spurring commercialization. Inadequate financing has been constantly cited as a major factor constraining agribusiness ventures. A study was conducted to assess financing mechanisms and their effects on banana businesses within the period March – April 2012. A total of 205 banana traders were randomly sampled from banana markets in Kirinyaga, Meru, Kisii and Nairobi Counties. A semi-structured questionnaire was used to collect data from the sampled traders. Descriptive statistics were used to characterize banana traders and enterprises. The study revealed that the majority of traders (82.4%) financed banana business activities through their savings while 17.6% accessed credit. However, the commercial level of operation of those who accessed credit was significantly higher than that of those who used their own savings. Thus, credit is important in supporting expansion of banana businesses and mobilizing banana trader associations for savings and credit access by members is likely to complement commercialization efforts.