Determinants of Savings Habits Among Cocoa Farmers in Ghana: A Case Study of Atwima Nwabiagya District of the Ashanti Region

Abstract

Cocoa, the main agricultural foreign exchange earner for Ghana, is mostly produced on a small-scale level. Cocoa farmers suffer poverty in old age as no formal pension schemes exist for them. Therefore, the only remedy for these farmers is to save for future investment and consumption. The objectives of the study include: to identify the motives for saving and the barriers to saving, and to examine the factors which influence cocoa farmers to save. The study sampled 364 cocoa farmers from the Atwima Nwabiagya district of the Ashanti region using the multi-stage sampling technique, and the questionnaire as the main field instrument. The results from the binary probit model showed that age, family size, size of the cocoa farm and gender are the main determinants of the saving habits of cocoa farmers. The study also showed that the cocoa pension fund is new to many of the cocoa farmers, thus only a few contributed their savings to the fund. The study recommends that the saving culture of cocoa farmers should be enhanced. Specifically, this can be achieved through financial literacy programmes, financial education and awareness on the importance of saving. Also, the cocoa farmers should be educated on the benefits of saving a portion of their income through the pension funds by the district Ministry of Food and Agriculture.

Keywords: Savings habit; cocoa farmers; financial education; probit regression; Ghana