European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.6, No.20, 2014 12 Analysing the Role of Structured Finance on Productivity and Livelihoods of Small Scale Farmers in Zimbabwe Munodawafa Njovo( corresponding author) Department of Marketing Management, Midlands State University P. Bag 9055 Gweru , Zimbabwe E-mail : njovom@msu.ac.zw Makacha Caroliny Department of Tourism and Hospitality Management, Midlands State University P. Bag 9055 Gweru, Zimbabwe E-mail: makachac@msu.ac.zw Abstract Developing countries’ economies are at a critical development phase and Zimbabwe is not an exception. Focus is on uplifting the small scale farmers who face a myriad of challenges in obtaining working capital. Working capital availability is considered critical for affecting farm productivity and livelihoods. Conservative financial institutions have not been coming to the rescue of small scale farmers owing to lack of collateral and sound balance sheets. The study sought to establish whether structured finance affected productivity and livelihoods of small scale farmers. The findings of the study were that capital availability affected productivity. It was however established that for structured finance to be a success it was not to be applied in exclusivity. There were ancillary issues such as infrastructure, training and information provision which had to be taken into account. Keywords: Structured finance, Productivity, Livelihoods, small scale farmer 1.Introduction Agriculture plays a central role in the well being of developing countries‘ economies and their people. Hanmer and Booth (2001) state that in developing countries , an average of 50 per cent of people make their living from farming and agriculture and in some countries , this figure rises to 80 per cent. There is an intimate relationship between poverty and agriculture. Three quarters of the 1.2 billion people who live on less than a dollar (US) a day , work and live in rural areas (Eastwood and Lipton, 2001). The arguments therefore confirm the findings of earlier studies which indicate that agriculture is key in the fight against poverty and must obviously play a central role in achieving the millennium development goals- MDG (Polaski,2006). Agriculture is instrumental to future poverty reduction, (UNCTAD, 2007). Growth in the agricultural sector has a singularly more powerful impact on poverty reduction than any other economic sector .Hanmer and Booth (2001) support the same notion by indicating that a one percent growth in agricultural productivity reduces the number of people living on less than a US $1 a day by up to 1.2 per cent. The issues highlighted help bring to the fore the reasons surrounding the land reform program in Zimbabwe which gathered momentum around the year 2000. Having given people land , the government put in place various packages to aid and /or assist operations on farms. Most people who benefited from the land reform program are subsistence farmers who appreciate little on the aspect of commercialization. It is extremely difficult for small scale farmers to enter markets and it is a widely shared view that market entry is a function of both the competitiveness of the producer and the characteristics of the supply chains. It is worrisome to note that the small scale farmers remain engraved in poverty. Government intervention has therefore not made the small holder farmer better off. Finance is extended to farmers through government agencies comprising RBZ, Agri-Bank and GMB. Other organizations have been seen to be playing a part in a way. These include COTTCO, TIMB and Heifer Project International. The finance so extended is structured in a way. The motives of the providers of structured finance are questionable. It is difficult to tell whether the finance so extended is meant to alleviate the plight of small scale farmers or is meant to unjustly enrich the “selfish companies”. It is the aforementioned analogy which corroborates the observations by Onumah, Davies , Kleih and Proctor (2007) that agricultural marketing systems have changed and continue to change as a result of globalization and liberalization as well as demographical factors , particularly urbanization. These changes, argue Onumah et al (2007) have led to the emergence of new market opportunities but have also exposed producers to increased risks in terms of uncertain access to markets , price instability and the risk of counter-party non–performance. For instance , globalization has led to the accumulation of massive buying power by a limited number of companies , especially the international supermarket chains with associated narrowing of the supply base .As a result, large and integrated agri-business firms are edging out small family