CÁLCULO DE GANANCIA DE LOS AMPLIFICADORES

In the 1950s up to the 1980s many developing countries (Nigeria included) made deliberate attempts to meet the financial needs of the small-scale marginalised farmers who had been excluded from the financial transactions of the formal institutions because of the scale of their production (Morduch 1999a; Meyer 2002b; Adams, Graham and Von Pischke 1984; Von Pischke 1991). Policy makers had to embark on various intervention measures to bridge the gap between the demand for and the supply of credit services to meet the specific needs of these marginalised farmers (Adams, Graham and Von Pischke 1984; Morduch 1999a; Meyer 2002b). Apparently these credit services sank billions of dollars of the donor development agents’ funds as well as the funds of the developing host countries (Adams, Graham and Von Pischke 1984; Morduch 1999a; Pulley 1989; Lapenu 2002; Khalily and Meyer 1993). These intervention measures, which included subsidised credit and other farm-related inputs, were provided through a number of special banks and quasi-development banks, for example, agricultural development banks, supervised credit agencies, and agricultural credit cooperative banks (Adams, Graham and Von Pischke 1984; Khalily and Meyer 1993; Von Pischke 1991).

Often times the credit program was accompanied by such farm inputs as fertilisers, pesticides, scientifically improved seeds or seedlings designed to improve the crop yield (Lapenu 2002; Khalily and Meyer 1993). Authorities embarked on these additional measures specifically to promote a certain agricultural regime such as the ‘green revolution’ crops that needed ample treatment of fertilisers and pesticides (Rutherford 2000; Lapenu 2002; Khalily and Meyer 1993; Adams, Graham and Von Pischke 1984). If and where access to a credit or loan facility was granted, it was often tied to a specific cash crop production; hence the value of the sanctioned loans varied between farmers depending on the acreage of land devoted to the crop in question, and this could only be increased in line with inflation. These sanctioned loans were to be recovered in balloon repayments after the farm crop products had been harvested (Rutherford 2000).

Improvement in crop yield aside, the creation of employment opportunities and the promotion of economic growth are among other key objectives of the small farmer subsidised credit schemes. On the whole these measures yielded very little because of three major reasons

expatiated as follows. First, the repayment rates of these loans fell below 50%, and the cost of subsidies swelled (Morduch 1999a; Lapenu 2002; Adams et al. 1984; Pulley 1989; Khalily and Meyer 1993). Second, many of the subsidies became diverted away from the intended recipients towards the politically powerful elites (Adams et al. 1984), and in some countries the repayment rates dropped well below 41% as in Bangladesh in 1985/86 (Lapenu 2002; Khalily and Meyer 1993; Adams and Von Pischke 1993), and in the Indian government- owned banks in 1986 because of corruption and political lobbying (Pulley 1989; Morduch 2000). Third, and perhaps the most significant reason, was that these measures largely failed to yield the real income and promote growth dividends as originally intended (Yaron and Benjamin 2002). Hence, the causes of the failure of the pre-1980 agricultural subsidised credit scheme approach can be traced to the following:

• Rural communities were wrongly perceived too poor to save, and therefore efforts were almost exclusively concentrated on providing subsidised credits to the farmers while ignoring savings that constituted a crucial component of the rural development.

• Subsidised interest rates often gave the impression that rural financial institutions (RFIs) were the government credit disbursement outlets, thereby resulting in a poor loan repayment culture, and the lack of self-sustainability of these institutions.

• Employees in the state-owned credit institutions often indulged in rent-seeking behaviour by giving priority to those borrowers who were willing and prepared to share the difference between the subsidies given or supplied at below the market price and the actual market loan interest rates.

• The traditional approach of lending for agricultural production to the mutual exclusion of other small non-agricultural rural economic enterprises.

• Negligence of opportunities for the promotion of other businesses for risk diversification and income growth.

• Subsidised agricultural credits at times resulted in inefficiencies of production by wrong product targeting and the excessive capital-intensive farming technologies that displaced the labourer-led agricultural farm production, ultimately leading to rural unemployment.

More fundamentally, the lack of procedure for bad loan recovery accounting, the lack of management information systems (MIS), and more significantly, the absence of an effective

monitoring device to identify best practice were all among the principal reasons for the failures and weaknesses of the agricultural subsidised credit scheme approach (Yaron, Zander and Von Pischke 1998). The decline in loan recoveries often led to a downward spiral in the revolving funds, whereby Yaron et al. (1998) further argue that sometimes loan repayments declined to a point at which the recovered loans were even used to pay staff salaries. The credit programs in this way became de-capitalised, leaving the lending institutions stifled of funds for new lending (Yaron, Zander and Von Pischke 1998). Moreover, the failure or inaction by the government funding agency or the sponsoring donor agency to update financial records via the MIS is also known to have diminished incentives for accurate and timely reporting by the intermediary institutions that had received the funds (Yaron, Zander and Von Pischke 1998). It is only a few institutions that frequently update their records in a more useful manner for the detection of problems and faults (Yaron, Zander and Von Pischke 1998). The lack of MIS usage also limited the capacity of the sponsoring agency to effectively monitor the performance of the rural credit institutions to identify and reward best practice. These deficiencies will again be visited later in the chapter from the Nigerian perspective.

2.3 Financing development projects globally in the 1980s–1990s with microfinance