Rural Financial Services Research Articles

A Reflection on the Implementation of Second National Fadama Development Project in Kaduna and Katsina States of Nigeria

This study attempts to reflect on the implementation of the Second National Fadama Project in Kaduna and Katsina states of Nigeria with a view to assessing whether the project implementation has been effective in reducing poverty among the participating communities. It was therefore, hypothesized that there is no significant relationship between the Community-Driven Development Strategy and effective implementation of Fadama II project in the area of access to rural financial services and poverty reduction in the host communities. The primary data were obtained through the use of questionnaire and personal interview while secondary data were sourced from books, journals, unpublished materials and internet. The study showed that there is a significant relationship between Community-Driven Development and effective implementation of the project in the host communities. The research recommended that to enhance the success of future projects, the government should not interfere with the activities of such projects, especially in the selection of members of such associations and government should provide loan facilities to the beneficiaries in order to boost their assets acquisition capacity.

The Robustness of Rural Financial Services: The Case Study of Cambodia (Presentation Slides)

This literature will be discussed and empirical modeling which is usually used and mentioned on difference types of small structural models to capture the whole picture of the microfinance institution committed in rural areas and others. These model might include major equations (Phillips curve equation) and the IS curve equation in order to be good representative in the microfinance field and market. Furthermore, some broadened equations will be modified well in order to run the regression due to real situations and circumstances in Cambodia (Draft papers only).

Rural Financial Reform in China: Progress Made and the Path Forward

Significant progress has been made in reforming China's rural financial system. Nevertheless, the current institutions are unable to meet the multilayered and diversified demands for rural financial services. Establishing a comprehensive and efficient rural credit system to support the dynamic
 commercial sector of the rural economy, small-scale farming and small and medium-size enterprises is the major challenge in China. This article identifies bottlenecks and suggests policies to develop a well-functioning and sustainable agricultural and rural financial system that would address the diverse needs of the rural and agriculture sectors. To preview the policy recommendations, attention should be given first to legislation and supervision, and then to the corporate governance structure of financial institutions.

Policy Choices and Challenges in Expanding Access to Finance for Growth in Rural Nigeria

Nigerian financial system has witnessed significant growth over the years. The phenomenal growth and high financial depth can be attributed in part to the country’s vast network of financial institutions, including rural finance. Improvements in rural finance notwithstanding, the supply of formal finance appears to be biased against the rural population. Rural communities remain centre of deprivations inspite of the various efforts at increasing financial services to them by the Government and the CBN. This therefore raises the following questions: what are the constraints and challenges of providing financial services in the rural areas? What are the policy initiatives that can be introduced to improve rural financial services in Nigeria? Hence the main objective of the paper is to examine the challenges and ways to improve rural financial services in Nigeria. Keywords : rural finance, growth, infrastructure, microfinance institutions.

DETERMINANTS OF SMALL SCALE DAIRY SHEEP PRODUCERS’ DECISIONS TO USE MIDDLEMEN FOR ACCESSING MARKETS AND GETTING LOANS IN DRY MARGINAL AREAS IN SYRIA

SUMMARYThe paper describes value chain actors and institutional arrangements along value chains, and identifies major determinants of farmers’ decision making to work with middlemen/traders ‘jabbans’ (or cheese makers), and based on those identify short implications for research, development and policy processes. We hypothesize that small-scale sheep producers are more dependent on middlemen for market and loans than larger holders, leading to welfare losses. Our empirical findings based on a Heckman model applied for 120 farming households conducted in Khanasser region (Syria) show that despite unequal benefits, local arrangements are more blessing than curse for the poor. Small-scale sheep producers and middlemen developed intricate institutional arrangements that are mutually beneficial. Producers act collectively to pool sufficient quantity of milk to be attractive to traders (jabban) while gaining access to market and cash loans mainly for feed. This provides the middlemen needed supplies with reduced transaction costs. This suggests that development organizations should support local capacity of producing organizations to work together, small-scale producers to organize, develop small scale dairy processing workshops for pooling and possibly processing milk, support training for direct market access and facilitate access to loans. Finally, supporting organizations such as rural financial services and micro-finance need to ensure up-to-date market information is available to ensure fair prices are paid. They should also be able to negotiate favourable conditions for loans and reach out to these resource-poor rural populations where formal credit systems are absent.

Empirical Analysis on Farmers' Mortgage Willingness to the Land Management Right and its Influencing Factors

Rural land mortgage loan is an important part of rural financial products and service modes innovation. As the main demand party of rural finance, farmers mortgage willingness is significant to the development and spread of rural land mortgage loan business. This paper, based on the survey data of 140 farmers in Liaoning Province in China, analyzes the mortgage willingness to the land management right and its influencing factors by using the Logit mode. The research results show that farmers mortgage willingness to the land management right is influenced by their age, working experience, the total area of their land, land transferring willingness, income source and supportive policy of the government. Based on the research, this paper also puts forward suggestions on quicken the development of land management right mortgage loan business.

Expansion of rural financial services through linkage banking in Tanzania: Is joint action between savings and credit cooperative societies (SACCOS) a promising approach?

Most Tanzanians do not access financial services. Rural areas are particularly disadvantaged, as the country has one of the lowest levels of access relative to regional and international norms. Commercial banks are conspicuously absent from rural areas, while savings and credit cooperative societies (SACCOS) are much more prevalent. Even so, both commercial banks and SACCOS have limitations that inhibit their ability to extend financial services to a large part of the population. This paper argues for increased collaboration between commercial banks and SACCOS to expand outreach through linkage banking. Linkage banking leverages the superior operational systems of the banks with the outreach and relationships of the SACCOS. To succeed, however, linkage banking must be approached as a long-term partnership that involves considerable capacity development.

Rapid change, climate adversity and the next ‘big dry’: Older farmers' mental health

To describe the experiences of older farmers in the face of prolonged drought and rapid change. Content analysis of issues and priorities raised in semi-structured community forums. Rural centres in NSW. One hundred and fifty older farmers, their families, Industry and Investment NSW, rural financial and mental health services, the Country Women's Association and other non-government agencies. Five public forums organised under the Rural Adversity Mental Health Program. Prolonged drought caused pressures on farmers that compounded the usual stresses of farming and of ageing. These were experienced in the context of rapid social and industry change, fuel price volatility and the insidious threat of climate change. Three main themes were articulated: loss, government compliance pressures and difficulties accessing and/or inappropriate services. Older farmers felt an overwhelming sense of loss: of profitability and professional success, community status, physical well-being and comfort, the ability to participate in the modern world and, above all, of relationships (partners, children and friends moving away). They interpreted government compliance requirements as evidence of community and government loss of trust in famers. They resisted using the few mental health services that might be available, fearing being labelled as 'crazy' and discouraged by the culturally inappropriate way in which services were offered. Older farmers would benefit from joint services related to health and well-being simultaneously with modern business management offered in trusted, comfortable settings.

Repayment behaviour in credit and savings cooperative societies

PurposeLike other developing countries, Rwandan rural credit market is repressed, shallow, segmented, inefficient and dual structured where both formal and informal financial systems operate side by side. While the later has been playing a predominant role, cooperative societies have emerged as an apt method of increasing the delivery of formal rural credit and savings facilities on sustainable and non‐exploitative terms albeit of financial imprudence stemming from poor credit repayment records. Thus, the purpose of this paper is to examine the factors contributing to credit repayment behaviour among the members of savings and credit cooperative societies in rural Rwanda.Design/methodology/approachBoth exploratory and descriptive designs are used for primary data collection on variables contributing to the repayment behaviour in savings and cooperative societies. Thereafter, a binary logistic regression empirical model is employed to estimate the contribution of each variable to credit repayment rate.FindingsThe results from the tested empirical model show that age, gender and size of the household, purpose for credit, interest rate charges and number of official visits to the credit societies, have a strong effect on loan repayment performance (statistically significant at p<0.05) whereas size of credit disbursed, credit processing and disbursing time, borrowers' market place and income transfer from relatives and friends are more or less statistically significant at p<0.20 level. The remaining factors have logical and explainable sings but are not statistically significant.Research limitations/implicationsThe primary limitation of this study is the scope and size of its sample as well as absence of income factor as one of important variable influencing repayment behaviour. These limitations may have an effect on the lending policy of the cooperative banks.Originality/valueAn understanding of the socio‐economic factors affecting repayment behaviour of rural clients is essential for the outreach and sustainability of the mushrooming cooperative societies in the country. Hence, this paper contributes to the empirical literature on the provision of rural financial services in African countries south of Sahara and Rwanda in particular.

Livelihood diversification and moneylending in a Rajasthan village: what lessons for rural financial services?

The complexity of rural economies in developing countries is increasingly recognised, as is the need to tailor poverty reduction policies according to the diversity of rural households and their requirements. By reference to a village in Western India, the paper examines the results of a longitudinal micro-level research approach, employed for the study of livelihood diversification and use of informal finance. Over a 25-year period, livelihoods are shown to have become more complex, in terms of location, types of non-farm activities, and combinations of activities. Moreover, livelihood pathways taken continue to be critically affected by economic and social inequalities implicit in the caste system and tribal economy. A longitudinal micro-level research approach is shown to be one that can effectively identify the many complexities of rural livelihoods and the continued dependence on the informal financial sector, providing important insights into the requirements for rural financial products and services.

Informal finance and rural finance policy in India: historical and contemporary perspectives

From the 1950s up to the early 1990s the All-India data show an ever-declining share of informal credit in the total outstanding debt of rural households. Contemporaneous micro-level studies, using more qualitative research methodologies, provide evidence that questions the strength of this trend, and more recent All-India credit surveys show, first, a levelling, and then a rise, in the share of rural informal credit in 1990/91 and 2000/01, respectively. By reference to findings of a study of village moneylenders in Rajasthan, the paper notes lessons to be drawn. First, informal financial agents have not disappeared from the rural financial landscape in India. Second, formal-sector financial institutions can learn much about rural financial service needs from the financial products and processes of their informal counterparts. Third, a national survey of informal agents, similar to that of the 1921 Census survey of indigenous bankers and moneylenders, would provide valuable pointers towards policy options for the sector. A recent Reserve Bank of India Report on Moneylender Legislation not only explores incentive mechanisms to better ensure fair practice, but also proposes provision for a new category of loan providers that would explicitly link the rural informal and formal financial sectors.

Village Savings and Loans Associations — sustainable and cost-effective rural finance

MFIs and banks find it difficult to cover the costs of providing rural financial services – especially in Africa. In its large-scale Village Savings and Loans Associations (VS&LA) programmes in Africa, CARE is tackling these difficulties by encouraging the formation of village loan funds entirely composed of members' savings, keeping the time-bound savings and lending methodology very simple and limiting external involvement to a one-year training and follow-up period. This article describes how the methodology works in principle and practice and describes evaluation results from the CARE VS&L programme in Zimbabwe, where very high rates of inflation pose a challenge to any microfinance programmes. Finally the need for management information systems and better record keeping are identified as issues that need further development.

Rural Livelihood and Food Consumption Patterns Among Households in Oyo State, Nigeria: Implications for Food Security and Poverty Eradication in a Deregulated Economy

KEYWORDS Rural livelihood; food security; poverty eradication and deregulated economy ABSTRACT Food security is a fundamental objective of development policy and also a measure of its success. Achieving food security is still a major problem for households in most rural areas of Nigeria; therefore the associated symptoms of food crisis are found throughout the country, though with differences based on occupation, agro- ecological, socio-economic factors and rural versus urban location. This paper analyses the livelihood and food consumption patterns among households in rural Oyo State, Nigeria. Analysis of data on a sample survey of rural households in three adjoining local government areas of Oyo State show that a household member consumes N3,465.13 worth of carbohydrate foods; N750.54 of proteins and N191.43 of vitamins. On the average, a household member consumes N1469 wroth of food per month; though with the modal amount skewed towards the civil servants and artisans. Results of the analysis further show that there are short falls of 18% and 11% in carbohydrate and protein intake respectively in three years. The general livelihood patterns indicate that farmers who produce more of food consumed in the study area have the least disposable income to cater for life's basic needs. The results of the study have implications for food security and poverty eradication, especially in a deregulated economy. Therefore, promoting agricultural policies with appropriate price incentives that focus on intensification; diversification and resource-stabilizing innovations will create more wealth for all categories of rural households. In all, more rural financial and agricultural extension services are needed; these will improve the conditions needed for increased productivity and capital accumulation.

THROWING LIGHT ON CATS IN THE DARK: AGRICULTURAL ECONOMISTS

SUMMARY This paper explores some of the policy and institutional choices to which the agricultural economics profession has most to contribute over the coming few years. The starting point of the paper is that policy needs to address aims of both efficiency and greater diversity within the sector, diversity being seen broadly as involving a wider range of participants in terms of ethnicity, gender, and aims and resources, as well as large, medium and small producing and service enterprises. The policy agenda is defined (section II) in terms of three linked elements: the analysis and choice of policy and defining a strategic vision; the reform of institutions and organisations; and public expenditure management. In all of these, the paper suggests there is an active role for economists. Policy analysis is discussed in section III. No single definition is found which adequately captures the complex of activities involved. The relationship between political and technical dimensions of policy analysis is disc...

THE EFFICIENCY AND OUTREACH OF RURAL FINANCIAL INSTITUTIONS IN SOUTH AFRICA

The current literature on the provision of rural financial services places far more emphasis on the sustainability of rural financial institutions as a means of ensuring effective provision than has been the practice to date. This paper reviews the various measures that have been used to measure both the efficiency (defined as effectiveness and productivity) and the outreach of rural financial institutions, as two key areas that have to be attended to if institutional sustainability is to be achieved. The results of some preliminary investigations into rural financial institutions in South Africa are then reported.

Rural Financial Service Associations – the concept

Because of their high transaction costs, banks have made limited progress in extending their services to rural areas in developing countries, and informal savings and loans groups, such as rotating credit clubs, are limited by the fact that they do not build up their capital between cycles. This article describes a new model for rural banking: Financial Service Associations (FSAs). The article describes some of the strengths and shortcomings of other formal and informal financial arrangements before describing in detail the proposed structure and services of the FSA. These include taking savings and providing loans to clients, who qualify for membership of the FSA by being locally based shareholders. Following on from this article, it is hoped that a subsequent issue of the journal will include a description of the FSA pilot projects taking place in South Africa and several other African countries.

Ownership and sustainability: Lessons on group-based financial services from South Asia

This study of rural group-based financial service projects of five NGOs in South Asia illustrates a great degree of variation between the different systems in structure, function and success rates. In the area of accessibility, all five systems have been quite successful in reaching the rural poor—especially non-literate women. However, results concerning financial sustainability of the groups are not so clear cut. The two systems in which the NGO helped groups to form their own parallel financial institution (e.g. a co-operative or village bank) achieved financial sustainability than those systems where the NGO linked groups with existing local financial institutions. But the main factor behind the success of parallel systems the central concept of client ownership. This has resulted in high degrees of loan recovery due to the fact that all or most of the loan funds are internally generated and therefore owned by the group members rather than externally obtained from donors. In addition, social intermediation in the sense of investment in capacity building at the group level (management, accounting, etc.) is a crucial step towards sustainability. Despite the importance of achieving sustainability, the authors conclude that subsidies do have a role to play—especially in harsh socio-economic environments where costs are necessarily high. However, subsidies should be utilized to develop group members' abilities to assume the responsibilities of ownership—rather supporting a welfare approach.

POLICY MAKING IN THE REAL WORLD: THE PROVISION OF RURAL FINANCIAL SERVICES / BELEIDMAKING IN DIE WERKLIKHEID: DIE VERSKAFFING VAN FINANSIëLE DIENSTE

This paper describes the process of information gathering and analytical work that was undertaken for the purposes of the Strauss Commission, as a case study of public policy making. The emphasis is on ways of overcoming information constraints given the short time available for the investigation. Any inquiry of this nature has to start with the question: why change? The reasons for change in the provision of rural financial services in South Africa are investigated as a prelude to the analysis of needs and institutions in their future context.

RESTRUCTURING RURAL FINANCIAL INSTITUTIONS

South Africa is in a process of change. This is also true for the agricultural sector and thus all related services. Agricultural finance, as a segment of rural finance, is the topic of an intended commission of inquiry, The current and intended public sector agricultural financial support structure should be measured against a set of guidelines. These are elaborated on in this paper. In addition, given the framework, some views are put forward as to what direction rural finance, and specifically agricultural finance should take, and what structure should be applicable, given the principles as outlined. The paper is concluded with some remarks about institutional change in South Africa and the intended rural financial services commission of inquiry.