Viability of Selective Agricultural Credit Programs in the Ivory Coast (Africa)
Yabile, Kinimoz Rene
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https://hdl.handle.net/2142/69846
Description
Title
Viability of Selective Agricultural Credit Programs in the Ivory Coast (Africa)
Author(s)
Yabile, Kinimoz Rene
Issue Date
1982
Department of Study
Agricultural Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Abstract
The modernization of small farm agriculture has become a crucial issue for the economic development of many developing nations. The Ivory Coast is no exception for the following two reasons: (1) the Ivorian economy is based mainly on agriculture and (2) most farms are small.
A number of factors limit the modernization of these small farms. These factors can be classified into the following three categories: (1) technology, (2) infrastructure, and (3) capital.
This study focuses sharply on capital. Capital constrains the farmer's economic and social progress by limiting his access to off-farm inputs. To reduce the effects of this capital shortage on farmers' production and income, the public sector's intervention (via the BNDA) in farm loans has increased sharply in recent years. One of the major challenges faced by the BNDA is the increasing default rate among borrowers. The high default rates have led the BNDA officials to disburse loans mostly in kind, in an attempt to limit the use of loan proceeds to "productive" uses. In any event the low interest rate policy and the high default rate caused the BNDA to operate at considerable financial losses.
Survey observations were analyzed with statistical methods to (1) describe selected populations, and (2) test effects on loan default of loans disbursed in kind.
The chi square statistical test and the regression analysis found that default rate is positively correlated with the percentage of loan in kind. In addition to the statistical tests, a linear programming model is used to (1) determine the impact of the breakeven interest rate on the farmer's economic welfare and (2) identify reforms that would reduce the producer's financial losses associated with the higher interest rate. The analysis leads to these findings. (1) The credit limit is far more important to the farmer's welfare than is the rate of interest he has to pay. (2) Relaxation of the restriction on the use of BNDA loan proceeds increases both the farmer's output and income. (3) The liquidity needs of the producer are real needs as demonstrated by relatively large proportions of assets held in liquid form to meet adverse contingencies.
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