Input market accessibility variables are not consistently collected across the LSMS-ISA countries. In some community surveys, like those in Tanzania and Uganda, we observe a community-level distance to the nearest market for seeds and fertilizer. When matching those community-level responses to the household level, the median distance to the nearest fertilizer market in Uganda is about 400 kilometers compared to 4 kilometers in Tanzania.

In addition to household reports of distance, we are also able to use household-level GPS coordinates to map the distance to the nearest major market center. While not necessarily an input market and likely not the closest available source of input purchases, we use this consistently observed variable as an indicator of remoteness and the magnitude of potential transport costs. Figure 6 shows the relationship between inorganic fertilizer application levels and this input market accessibility proxy. Nigeria and Malawi, after a point, may be the only countries with a noticeable negative relationship. The trend is mostly flat in Niger, Tanzania, and Uganda, with a huge amount of fluctuation in Ethiopia. We expect the fact that these relationships are not more pronounced is due, in part, to the fact that input dealers and traders may travel further into rural areas where road networks and incentives allow.

# <u>Incidence of credit</u>

Because cash resources may be limited for smallholder farmers and/or cash inflows do not arrive when inputs need to be purchased, access to credit can be an important catalyst to input use and subsequent agricultural productivity gains. For example, Matsumoto and Yamano (2011b) find that having access to fertilizer credit increases teff yields by 37 percent in Ethiopia. Because of poorly developed financial markets and the high risks associated with providing credit to smallholder farmers, credit is widely thought to be used only minimally throughout SSA and, therefore, to act as a major constraint to input use (e.g., Croppenstedt, Demeke, Meschi 2003; Zerfu and Larson 2010).

Table 28: Percent of households receiving credit of different types

||Any type of credit<br>(unspecified use)|Agric<br>Credit for inorganic<br>fertilizer|ultural inputpurcha<br>Credit for<br>improved seed|ses<br>Credit for<br>agrochemicals|
|---|---|---|---|---|
|Ethiopia|24.6|-|4.6|-|
|<br>Malawi|-|0.5|-|<0.1|
|Niger|-|0.9|-|0.3|
|Nigeria|-|0.9|<0.1|-|
|<br>Tanzania|-|0|0.6|-|
|Uganda|-|0.9|-|0.6|

Note: See for text for more on how these variables are observed in each questionnaire.

Table 28 summarizes the credit use statistics we observe in the LSMS-ISA data, which should include both formal and informal sources. Credit use is not necessarily the opposite of credit constraints, however, as credit constraints are generally unobservable. In Ethiopia, nearly 25 percent of cultivating households claimed to receive some type of “credit service,” although whether for agriculture or other household purchases we cannot be sure. Apart from this generic question, we observe about 5 percent of households acquiring credit to pay for maize seed in particular, but do not observe similar statistics for other inputs. In Malawi, Niger, and Uganda, 43