Determinants of Cash-savings of Farmers in Rural Savings and Credit Cooperatives in Southern Ethiopia

Abstract

Aims: Rural Savings and Credit Cooperatives are important financial institutions in remote villages of Ethiopia offering avenues for savings and credit for farmers and the poor. The aim of this study was to find out the determining factors of farmers’ cash-savings in rural cooperatives. Study Design: The Study design followed was Ex-post facto Design through survey research. Place and Duration of Study: This study was undertaken in Boloso Sore district (woreda) of the Wolaita Zone, Ethiopia. The study was held between January 2016 and May 2016. Sample: From six cooperatives of the study district, 116 farmers who had been members of the cooperatives were selected as respondents. Methodology: Primary and Secondary data were gathered respectively from farmers and district government agencies respectively. The sample size was determined using Yamane formula. The primary data yielded quantitative information on average per capita annual amount of cash-savings by farmers (dependent variable). Similarly, data was gathered on 13 possible determining factors (variables) to explore their regression over the Annual per capita Cash-savings (Dependent variable). Multiple Linear regression technique was deployed to find out the strength of relationship between independent variables and the dependent variable.   Results: Descriptive statistics of the study showed that average per capita farmer annual saving in cooperatives was 297 ETB (USD 13). The parameter estimation of the linear regression model revealed that out of 13 variables tested, eight (8) were found to be significant at different probability levels. Size of land holdings, amount of on-farm income, amount of non-farm income, amount of loan, and access to training are positively and significantly related to the level of farmers’ average annual savings. On the other hand family size of respondent, total expenditure and credit beneficiary status of respondent was negatively and significantly related to the level of farmers’ average annual savings in cooperatives. Conclusion: As anticipated, assets possessed by farmers and their income were found to enhance the per capita savings of farmers in cooperatives. Corollary to this finding was that those resource poor and income poor had difficulty is savings. The cooperatives may have to design different strategy for encouraging savings among them. Similarly, family size and expenditure were inversely related to savings, for obvious reasons. Thrift habit was recommended to be inculcated among farmers having large family size and expenditure. Training was proved to be a game changer in terms of ensuring higher farmers’ savings. The cooperative management could consider frequent cooperative training of farmers for mobilizing higher savings.