Impact Of Agricultural Market Reforms On Smallholder Farmers In ...

applied for credit compared to 20 percent for the latter. Females were almost as likely as men to
obtain credit. However, while 49 percent of female-headed households applied for a loan for
personal expenses, only 32 percent of the male-headed households used it for personal expenses.
Male-headed households tended to use more credit than female-headed households for
agricultural investments and to purchase fertilizers. Also, while a higher percentage of maleheaded
households borrowed from moneylenders, female-headed households seemed to borrow
more from the MRFC. The MRFC charges market interest rates similar to any commercial bank.
This is probably why female-headed households pay interest rates that are four times higher than
their male counterparts (16 versus 4 percent per month). It seems that only male-headed
households had access to the SEDOM, the Development of Malawi Traders (DEMATT), or credit
clubs. Female-headed households were also more likely to note an increase in access to credit
since 1995.
The survey data suggest that although larger and wealthier farmers are more likely to apply for
credit, they are less or equally likely to obtain the loan than smaller or poorer farmers. This may
indicate that there is no discrimination against small and less well-off farmers in terms of granting
credit. The only difference in terms of farm size and wealth is that smaller and poorer farmers
tend to rely more on money lenders and to borrow for personal expenses while larger and
wealthier farmers use the SEDOM more often and borrow mainly for investment purposes. The
MRFC is also more commonly used by wealthier farmers. As expected, smaller farmers are more
likely to not apply for credit because of lack of collateral. Poorer farms seem also more likely
than richer ones to witness a decrease in access to credit since 1995. However, perception about a
decrease in access to credit since 1995 was not positively associated with farm size.
Differentiating between tobacco and non-tobacco growers shows that the probability of applying
for a loan was higher for tobacco growers: while 24 percent of tobacco growers applied for a
loan, only 17 percent of non-tobacco growers applied for one. The purpose of the loan also
differs a little bit between tobacco and non-tobacco growers. Use of loans for personal expenses
and to buy fertilizer was more important for tobacco growers; while use of loans for investment
purposes was more frequent for non-tobacco growers. This may indicate that tobacco growers
have more access to credit to smooth out current consumption because of their higher creditworthiness.
Use of loans for fertilizer is also more important for tobacco growers since they are
three times as likely to apply fertilizer than non-tobacco growers. Surprisingly, almost an equal
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