Abstract:
This paper assessed the capacity of microfinance to enhance cocoa production in Ghana. Lack of adequate
access to credit has been seen as an important factor that prevents smallholder cocoa farmers from expanding
their cocoa farms and getting access to inputs such as appropriate pesticides, fertilizers and seedlings. This
situation impacts negatively on their cocoa production and their overall household welfare. By providing credit
facilities to smallholder cocoa farmers, it is expected that these facilities would enable such farmers to have
access to the needed inputs to improve on their cocoa production. Primary data were collected from two cocoa
producing communities in the Ejisu-Juaben Municipality of the Ashanti Region of Ghana. Questionnaire was
used to elicit responses from 235 cocoa farmers who were randomly selected from the two communities.
Multiple and logistic regressions were used to ascertain the influence of access to credit on cocoa production.
The results indicate that access to credit had a significant impact on the cocoa production of farmers. Access to
credit was also found to be significantly associated with the likelihood of farmers saving. However, loan
repayment was a major problem faced by the farmers, due to the inflexible nature of repayment schedules which
do not consider the seasonal and risky nature of their farming activities. It is recommended that appropriate
microfinance products such as long-term farming loan products be developed for cocoa farmers since many of
the smallholder farmers depend on microfinance institutions (MFIs) for loans to finance their farming activities.
Furthermore, Bank of Ghana could encourage more MFIs especially rural banks to be sited near cocoa growing
areas and make credit accessible to cocoa farmers.
