Impact of agricultural credit on the living conditions and resilience of farmers to climatic shocks in the region

Abstract

Financing agriculture remains a critical challenge in the Faranah region of Guinea. Despite its importance, empirical research on the effects of microfinance institutions (MFIs) on the living conditions and resilience of agricultural producers remains sparse. This study seeks to fill this gap by examining the impact of MFIs on household livelihoods and the enhancement of beneficiaries’ resilience to climate-related shocks in the region. Data were collected from a stratified sample of 780 individuals across twenty localities. The Cramér’s V test was employed to assess the strength of the association between access to microcredit and key livelihood indicators. The findings reveal that access to credit positively influences the standard of living of producers, particularly in terms of the number of daily meals consumed and the quality of housing, with statistically significant Cramér’s V values of 0.1452 and 0.073, respectively, at the 5% significance level. Additionally, microcredit access significantly improved beneficiaries' resilience capacities, as evidenced by a Cramér’s V value of 0.065, significant at the 1% level. These results underscore the importance of financial inclusion in strengthening adaptive capacity and enhancing rural livelihoods. To sustain these gains, it is imperative to establish appropriate risk mitigation mechanisms—such as agricultural insurance schemes and tailored financial guarantees. In the absence of such instruments, the development of the agricultural sector may remain constrained by limited access to adequate financing.

JEL Classification: B21; C58; G50

Paper type: Empirical research