The provision for financing agricultural development is one aspect affecting a part of the economy, and its role should be seen within the contex of overall planning. The possibilty of adequate and accurate planning depends, to some extent, on the quality of statistical material available. Collection of this information is the responsibility of the Government.
The on-going policy in which credit to the agricultural sector depends on the extent of commercial banks’ loans and advances, reveals some inadequacies in planning. Among the variables that affect loans and advances is the general economic climate within the country. In periods of economic recession in other sectors, there can be little investment, and hence little borrowing. In which case, the proportion of loans that can be directed towards agriculture will be reduced.
In this respect, the importance accorded to agricultural credit seems to be inadequate as actual capital requirements are not known, and, even when allocations are made, there are no reasons given to justify such commitments. This raises the question as to how planning can be done without good data, highlighting the need for prior investigation of the likely viability of potential credit programmes.
Such an investigation could, in addition to other findings, provide good information on the general nature of demand and the existing supply sources of credit. Currently there is no information on the contribution made by informal sources of credit. As a policy prescription, the Government should exercise leadership to obtaining necessary information in order to facilitate good planning.
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banks to extend their services into rural areas and this, and other restrictions, seems to have overstretched their capacity. Part of their reluctance stems from fear of loosing staff, who may be unwilling to work in the rural areas because of lack of some basic amenities. Rural banking programmes call for enlargement of bank personnel, and one of the constraints faced by banks is insufficient trained and experienced manpower.
The implications are obvious, and require a planned programme of development. In addition, since these institutions are virtually owned by the Government, and rural development is high on the list of priorities, the financial cost of rural bank expansion should be borne by the Government. As an interim measure, the use of mobile bank units operated particularly on rural market days may help in mobilising rural savings and overcome the remoteness of villages and problems of transportation which appear to impose serious handicaps to banking accessibility.
Nevertheless, there is also greater need to inculcate the spirit of banking among the people through education programmes. In this respect, lending institutions should be persuaded to visit the remote villages and attend local meetings organised by groups, cooperatives or communities. This would promote interpersonal relationships between the rural communities and institutions and help to generate mutual trust.
The existence of collective rights and the ineffectiveness of the current land law pose serious problems to agricultural programmes and in particular, credit delivery. Land consolidation through group and community participation may offer some useful solution, this is an approach found to be workable with the smallholder tree crop programme in the study area. The other approach may be through revamping the cooperatives by proper extension activities and education, and workable programmes. The merits of these approaches are obvious, community and group farming and cooperation are good channels for agricultural loans and could form a good support for input distribution and marketing, if properly organised.
Finally, it is impossible to solve food shortage problems through credit delivery alone without tackling at the same time problems that may arise in marketing produce and supplying inputs. The implication is
obvious, what is required is an integrated approach agricultural credit, marketing and input supply.
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