Effect of digital platforms on Return on Investment

Abstract

This study investigates the effect of digital platform usage on Return on Investment (ROI) among smallholder onion farmers at the Igomelo Irrigation Scheme in Tanzania. Using a cross-sectional survey of 399 farmers, the Two-Stage Least Squares (2SLS) model was applied to account for endogeneity between digital adoption and ROI. Results reveal that digital platforms such as WhatsApp, Facebook, Instagram, E-Kilimo, and Fresh Kilimo significantly enhance ROI by improving market access, reducing transaction costs, and increasing marketing efficiency. Instagram and Facebook demonstrated the strongest positive effects, highlighting their role in connecting farmers to premium buyers and transparent pricing systems. Household size, land ownership, and access to credit and extension services were also positively associated with higher ROI, reflecting the importance of socioeconomic and institutional support. The findings underscore that digital platforms are vital for transforming smallholder agriculture by fostering informed decision-making, lowering marketing inefficiencies, and promoting inclusive growth. Policy efforts should focus on improving digital literacy, connectivity, and financial inclusion to sustain ROI growth.