The key objective of the Micro Credit Innovations Department has been to facilitate sustained access to financial services for the unreached segments of the population. Lack of access to credit precludes smallholder farmers from making investment that generates greater level of income, consumption and wealth. Efforts towards scaling out services of microcredit institutions should target improving financial literacy of the rural poor and their current financial need on the basis of other resources such as land and livestock they owned with the ultimate goal of ensuring household food security. the poor in rural hinterlands, through various products and delivery channels in a cost effective and sustainable manner. Microfinance plays a crucial role in addressing the financial needs of smallholder farmers and rural entrepreneurs, enabling them to invest in their agricultural activities, enhance productivity, and improve livelihoods. Such microcredit is provided to the borrower to start any small business like carpentry, fishing, agriculture, stitching, etc. Microfinance is considered as one of the most significant contributors to eradicating rural area poverty and improving the living standard of the poor people. Sustainable agriculture and food systems such as organic agriculture and agro-ecology improve food security, eradicate hunger and are economically viable, while conserving land, water, plant and animal genetic resources, biodiversity and ecosystems and enhancing resilience to climate change and natural disasters.
Micro credits are playing a massive role tackling the shortage finance in rural area to purchase improved agricultural inputs. These inputs inturn enhace agricultural productivity, food security and sustainable agriculturs as well
small holder farmers need cash to procure agricultural inputs and to diversify their means of livelihoods. Microcredit with low interest rate can help the farmers to get better input access(fertilizer, agricultural tools, seeds....). If they are not getting such credit, the household may decide to sell the available assets or to rent part or whole of their small parcel of land ....to do off/on farm activities(less time for their own farm management).....Hence role of microcredit if it is well managed and reached at the right season can ensure agriculture sustainability otherwise it may have negative impacts. It may make the farmer indebted if the household didn't spend it in productive way
Dear, Dr.Mohamed Francis Musa. This is an interesting question.
In the current global competition economy, most of the developing countries are associated with risk due to decision-making in conditions of uncertainty.
Therefore, the role of microcredit can increase the decision-making and selection conditions towards sustainability in farmers and reduce obstacles and risks. In such a situation, small farmers move towards food security with less risk by accepting process credit. Therefore, it can be concluded that the role of credits in the mentioned process can be effective in the food security of smallholder farmers by applying resource management.