The dynamics and implications of credit and debt among small farmers: the case of the Uyui district in Tanzania

In the 2000s, the government of Tanzania in cooperation with the Central Bank of Tanzania introduced a number of policies aimed at financial inclusion in rural areas. This process led to the establishment of Savings and Credit Cooperative Organisations (SACCOS) and Village Community Banks (VICOBAs). While on some accounts very successful, these informal financial schemes have also brought with them high levels of credit dependency and indebtedness among small farmers. Using qualitative interview methods, the present study investigates the dynamics and implications of credit and debt among small farmers in the Uyui district which found in the Tabora region by comparing one SACCOS and one VICOBA. My main objective is to clarify to what extent it is the positive side of credit or the negative side of debt that dominates these efforts at financial inclusion. My findings show how credit benefited some of the small farmers who handled their loans well and managed to become small entrepreneurs, while other debtors-farmers failed to repay their loans on time and lost their land, thereby changing their class positon from small landowners to wage labourers. It is likely that climate change and the resulting bad harvests will increase the number defaulting debtors in the near future.