Institutional Barriers and Policy Constraints to Credit Access Among Smallholder Dairy Farmers in Kenya: A Best Worst Scaling Approach

Abstract

This study aimed to identify and prioritize institutional barriers and policy constraints affecting access to credit among smallholder dairy farmers in Kenya. The research was conducted in Rongai sub-county of Nakuru County, targeting smallholder dairy farmers who play a central role in the country’s milk production. Primary data were collected from 298 farmers using semi-structured questionnaires, while secondary data were obtained from relevant literature. A multistage sampling technique was employed, and the Best-Worst Scaling (BWS) Case 1 approach was applied to systematically rank the most and least limiting institutional and policy-related constraints. The findings revealed that high interest rates, collateral requirements, and inflexible repayment terms were the most critical barriers limiting farmers’ access to credit, while documentation and proximity to financial institutions were less constraining. The study concludes that institutional and policy-related challenges significantly impede smallholder farmers’ participation in formal credit markets. It recommends adopting flexible collateral options, digitizing and simplifying loan application processes, and investing in rural financial infrastructure and literacy to enhance credit accessibility. These findings provide valuable insights for policymakers, financial institutions, and farmer organizations to design inclusive financial systems tailored to smallholder needs.

Keywords: Credit access, institutional barriers, policy constraints, best-worst scaling, smallholder dairy farmer.

DOI: 10.7176/JESD/16-6-06

Publication date:September 30th 2025