The effects of farmer access to credit on dietrary diversity in Zambia.

Abstract

Farmer access to credit is one of the financial solutions for addressing malnutrition, having been extensively researched in several countries with multiple studies concluding that access to credit has the potential to improve a smallholder household’s dietary diversity and ultimately reduce malnutrition. However, limited literature exists to clarify this association in Zambia. To address the knowledge gap and understand this association. The study examined how farmer access to credit affects Zambia’s dietary diversity. The study used an instrumental variable approach where Loan society membership and the Headman/Headwoman’s relation to the household head are instrumental variables on data collected from the Rural Agricultural Livelihood Survey (RALS) of 2015, which covered 7934 agricultural households from 10 provinces. The results indicate that smallholder household’s that accessed credit consumed at a significantly higher dietary diversity compared to otherwise, with a difference of 0.352units at a p-value=0.040. However, these results are limited to smallholder households that are also likely to receive FISP. At the same time, education attainment to secondary and tertiary levels lowered a household’s dietary diversity than no years spent in formal education with a significant difference of 0.119 and 0.221units, respectively. At a p-value=0.013 for secondary education and p-value=0.004 for tertiary education attainment. The study suggests that access to agricultural credit can improve a household’s dietary diversity. Whereas increasing the number of families pursuing higher education attainment enhances the household’s nutritional awareness and preference to consume various food groups. The study further suggests that measures to promote the financial inclusion of smallholder farmers in agricultural credit are crucial. Though further research is needed to identify the long term effect of credit access on household dietary diversity.