Effects of Systematic Risk Factors on Profitability of Cassava Farming in Zanzibar
Zuhura Mohamed Abdallah
Zanzibar University, Tanzania.
Ali Mohammed Ali *
Zanzibar University, Tanzania.
*Author to whom correspondence should be addressed.
Abstract
Backbone of Zanzibar economy is farming. Farming contributes much in the form of profitability generated that is influenced by systematic risk factors. This study aim is to find the effect of systematic risk factors on the profitability of cassava farming in Zanzibar. The sales margin is used to measure the profitability of cassava farming in Zanzibar; while real GDP, inflation rate, lending interest rate and broad money are used as systematic risk factors. By using annual time series data from 1985 to 2016, Ordinary least square (OLS) method is employed in running the regression. The finding of the study shows a significant negative effect of the inflation rate, broad money and lending interest rate. Therefore, the Government should closely monitor and prudently manage the systematic risk factors. Moreover, Cassava producers should be aware of the changes in systematic risk factors.
Keywords: Systematic risk factors, profitability, sales margin, cassava farming.