Intention to adopt microfinance services among smallholder farmers in Tanzania: can perceived benefits and perceived barriers sharpen the theory of planned behavior?

Abstract

In Tanzania, the government promotes microfinance services to assist local citizens who are not qualified for conventional banking services. In response to government’s policy, more financial institutions are providing microfinance services but the response from smallholder farmers is not encouraging. To solve the problems; the influence of perceived barriers, perceived benefits and the TPB constructs’ (attitude, subjective norms and perceived behaviour control) on intention to adopt microfinance services were examined. Quantitative approach using drop-off and pick-up self-administered questionnaire was employed to collect data. Probability sampling technique was used to select 600 smallholder farmers and 489 of the collected questionnaires were useful for analysis. The study’s hypotheses and mediation effects were tested by using structural equation modelling (SEM). The results suggest that all studied variables could influence the smallholder farmers’ behavioral intention. Furthermore, their attitude could mediate the effect generated by perceived benefits on intention to adopt microfinance services. Nevertheless, their attitude could not mediate the effects created by perceived barriers on intention to adopt microfinance services. The government should organize more training sessions to enhance farmers’ financial knowledge; disseminate the microfinance’s benefits more efficiently; introduce financial products that match rural farmers’ needs; reduce the interest rate; and revise group lending models. Problems in comprehending the questionnaire message and the conduct of research in a secular state could limit generalization of the present results to population. Finally, Future researchers are suggested to investigate how respondents with different language background could understand the questionnaire message and widen the data collection areas.