Climate Risk and Access to Agricultural Credit: Do Climate Adaptation Strategies Matter?
Keywords:
Climate risk; agricultural credit; adaptation strategiesAbstract
The study aims to determine the relationship between climate risk, adaptation strategies and access to agricultural credit among agribusinesses in Bulawayo Province in Zimbabwe. It endeavours to reveal if climate adaptation strategies alleviate the problem of access to credit for firms in climate risk prone areas. The research builds on research on climate risk and access to credit by examining the role of climate adaptation strategies in a semi-arid region. It relies on survey data from 367 agribusinesses, collected through structured questionnaires and interviews. Thematic analysis and logistic regression were used to analyse data. The results indicated that climate risk significantly lowers the chances of credit access. Financial institutions react to climate risk by imposing stricter lending standards, increased collateral requirements, and pulling out of vulnerable segments. Though results show that adaptation strategies positively influence credit access, lenders do not directly incorporate these in credit models. Therefore, climate risk will continue to act as a constraint to finance availability unless climate-sensitive credit scores and adaptation strategies are incorporated into the lending models. The study brings out the impact of climate adaptation strategies on credit access of agribusinesses operating in semiarid regions.
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