Factors influencing farmers' attitude towards formal and informal Financial Markets in the Northern Cape, South Africa

This study examines factors influencing farmers' attitude towards formal and informal Financial Markets in the Northern Cape, South Africa. From each of the two districts selected, 80 farmers were randomly selected to give a sample size of 160, however seven questionnaires were discarded after it was discovered that only half of their questionnaires were properly filled, thus giving 153. A questionnaire was developed based on the objectives of the study to collect data on demographic details, farming experience, marital status, education level, ethnic group, land ownership, access to credit from commercial banks, credit worthiness, distance to credit institutions, collateral, formal and informal credit, characteristics of informal financial markets. Data collected were subjected to analysis with SPSS version 20 using frequency counts, percentages and Multiple regression analysis (OLS). Majority of the farmers (70.6%) have been farming for more than five years, between 51 and 65 years of age (54.9%), 77.8% are men. Most of the respondents (73.9%) use communal land to farm, with only 11.8% owning it, while some rent this land from the government (14.4%). Prominent constraints are stringent collateral requirements (86.3%), distant financial markets from farmers (80.4%), and high transaction costs (65.4%). The most prominent attitudinal statement as ranked by the farmers were more responsiveness to the needs of emerging farmers (88.9%) loans provided are too low(93.5%), and services are not sustainable (91.5%). The socio-economic characteristics were significantly related to attitude towards formal financial markets (F-value of 3.642, p<0.05) with five significant variables namely farming experience (t=2.41), land ownership (t=3.86) and type of dwelling (t=2.50), education level (t=1.71) and ethnic group (t=-1.71).