The Effects of financial inclusion on agricultural productivity in Kiambu, Kenya
Date
2025
Authors
Onyango, B. A.
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Publisher
Strathmore University
Abstract
Agriculture is the dominant sector in Kiambu County, significantly contributing to the local economy and providing livelihoods to the community. Financial inclusion refers to the accessibility of quality financial services at a reasonable cost, is recognized as a powerful force that can boost agricultural productivity. Despite its potential benefits, the agricultural sector faces a significant gap in access to financial services, that is accounts, credit, savings, and agricultural insurance. While empirical studies have provided insights that illustrated the positive effect of financial inclusion on agricultural productivity, there is limited evidence of a comprehensive approach that integrates multiple financial inclusion indicators along with socio-demographic factors such as gender and education. This research utilized financial intermediation theory and endogenous growth theory to understand the phenomenon. The financial intermediation theory emphasized the role of financial intermediaries and explained why farmers are financially excluded, while the endogenous growth theory highlighted the importance of internal factors such as knowledge, innovation, and human capital in driving economic growth. The study aimed to establish the relationship between financial inclusion and agricultural productivity at the household level by analyzing financial inclusion indicators while considering socio-demographic factors, gender, and education with fertilizer consumption included to isolate the specific effect of financial inclusion on productivity. Using descriptive and correlational research design, primary data was collected from 100 households in Kiambu through a one-year household survey. The multivariate Ordinary Least Squares (OLS) regression model revealed that financial access and utilization—specifically bank accounts and credit—and socio-demographic factors, gender and education are crucial in determining agricultural productivity. Other variables, including mobile accounts, agricultural savings, insurance, mode of payment, and fertilizer type, did not show statistically significant effects. The study contributed to empirical literature by providing a context-specific analysis of financial inclusion's effect on agricultural productivity in Kiambu. The findings are useful for policymakers and financial institutions as they highlighted the need for tailored interventions to address the financial inclusion gap thereby enhancing the farmers’ economic well-being. The study's limitations included a small sample size and the exclusion of factors like market access and climate conditions, which may affect agricultural productivity.
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Full - text thesis
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Citation
Onyango, B. A. (2025). The Effects of financial inclusion on agricultural productivity in Kiambu, Kenya [Strathmore University]. http://hdl.handle.net/11071/16008