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AFRICAN REVIEW 2008

ACCESS TO CREDIT AND ITS EFFECT ON THE ADOPTION OF AGRICULTURAL TECHNOLOGIES: THE CASE OF ZANZIBAR  ACCESS TO CREDIT AND ITS EFFECT ON THE ADOPTION OF AGRICULTURAL TECHNOLOGIES: THE CASE OF ZANZIBAR

KHALID S. MOHAMED and ANDREW E. TEMU    

Access to credit is among key elements for improving agricultural production and poverty reduction. Credit can facilitate farm households to purchase the needed agricultural inputs and enhance their capacity to effect long-term investment in their farms. Despite this importance, the majority of farm households lacks access to formal credit. This study therefore was conducted in order to create knowledge of the factors that determine access of rural households to formal credit in Zanzibar and to establish the linkages between access to credit and the adoption of agricultural technology under the Zanzibar smallholder farming conditions.
Conceptually, access to credit can be influenced by institutional factors and household characteristics. Analyses of factors at the household level is therefore important to design strategic interventions aimed at deepening financial services through rural households in Zanzibar. In conducting this study, both primary and secondary data were collected. The data collection took place between May and June, 2006, covering the five districts of Unguja and Pemba islands. The districts involved in the study were North ‘B’, West and Central (for Unguja island) and Wete and Chake Chake (for Pemba island). In total 750 households were surveyed. Secondary data were collected from relevant institutions, including existing financial institutions. The analysis of data collected was done descriptively as well as econometrically using STATA 10.0 and SPSS 13.0 computer softwares.
The main findings of the study suggest that a number of socio-economic factors are important in influencing farm households’ access to formal credit. These factors are: the number of accesses to credit, the possibility of keeping livestock, having a bank account, the value of productive assets owned, household income and the intensity of adoption of agricultural technologies. As regards factors determining farming technologies adoption, extension contacts intensity, household size, number of accesses to credit, and value of productive assets were found to significantly influence the adoption of agricultural technologies. However, with the exception of the number of accesses to credit, these variables were significant only for the non-credit constrained households and not for the credit constrained households. These results suggest the need for targeting credit interventions to farm households who are credit constrained for improving access to credit and the adoption of agricultural technologies.


DEMOGRAPHIC STRUCTURE AND PRIVATE SAVINGS: SOME EVIDENCE FROM EMERGING MARKETS  DEMOGRAPHIC STRUCTURE AND PRIVATE SAVINGS: SOME EVIDENCE FROM EMERGING MARKETS

JEHAD YASIN    
ISBN: AFRICAN REVIEW OF MONEY FINANCE AND BANKING

This paper tests the life cycle hypothesis that private saving rises with a higher percentage of working population and fall with higher percentages of the young and retired groups. Consistent with this hypothesis, our results from annual data for fourteen emerging markets suggest that age structure is a prime determinant of national saving. The results reveal a significant positive (negative) relationship between the national saving ratio and the percentage of working (children) population groups in the majority of the countries. The results are less conclusive regarding the statistical relationship between national saving and the elderly population group and several explanations for the apparent weak relationship are discussed.


DETERMINANTS OF THE LENGTH OF DELAY IN REPAYMENT ON INDIVIDUAL MICROCREDITS: APPLICATION OF A DURATION MODEL  DETERMINANTS OF THE LENGTH OF DELAY IN REPAYMENT ON INDIVIDUAL MICROCREDITS: APPLICATION OF A DURATION MODEL

BEN SOLTANE BASSEM    

The purpose of this research is to analyze the determinants of the duration of repayment delay in the individual microcredits granted by the Tunisian microfinance institutions. The methodology adopted in this analysis is relatively recent in the field of economic sciences. It consists of an analysis through the duration models on the data relating to 156 borrowers. Results show that both the nature of the business and the borrower’s business experience strongly reduce the duration of delay. Nevertheless, the legal statute of the business (formal or informal), the guarantor, and the presence of other lending institutions in the same geographical area offering the same service, are factors that affect positively the delays of repayment. The managerial implications of the found results were also discussed.


FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: OPPORTUNITIES AND CONDITIONS  FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: OPPORTUNITIES AND CONDITIONS

EL MOUSTAPHA OULD SIDI MOHAMED    
ISBN: AFRICAN REVIEW OF MONEY FINANCE AND BANKING

Financial sector development should be positively judged as it improves effectiveness of the financial system and widens the savings and credit products offer, which improves long term economic growth. In this view, and with reference to the pressures of the modernisation and development processes related to globalisation, it is interesting to know if the Mauritanian financial system can bear the risk of opening to other countries and of the global integration and what are the conditions for its contribution to the country economic growth. This is the purpose of this article. The analysis of Mauritanian economy from 1985 to 2004 shows a marginal positive effect of banking sector on economic growth. This weak contribution can be explained by the absence of a dynamic banking system, able to transform available financial resources in profitable projects. Financial openness is an opportunity for developing countries to improve their funding but the recent financial crises have demonstrated the need to mobilise local resources to foster healthy economic growth less dependent on foreign funds.


SUCCESSES IN EXPANDING MICROFINANCE OPPORTUNITIES IN RURAL ETHIOPIA - CAN THE ENTREPRENEURSHIP CHALLENGE BE OVERCOME?  SUCCESSES IN EXPANDING MICROFINANCE OPPORTUNITIES IN RURAL ETHIOPIA - CAN THE ENTREPRENEURSHIP CHALLENGE BE OVERCOME?

GETANEH GOBEZIE    

Microfinance opportunities have been successfully expanding in Ethiopia during the past fifteen years, including in remote villages, where the majority of people are engaged in small-scale agriculture, which is little supported by modern technology. Some of the key strategies for the success include: innovative adaptation of the group guarantee lending model, successfully customized to local Ethiopian realities; decentralization of operation, including a focus on using indigenous knowledge and resources in client screening and follow-up; appropriate strategies to deal with financing small scale (rain-fed) agriculture, often subject to season changes. However, much remains to be done. The outreach in micro-credit is estimated to have satisfied only a small proportion of the potential demand, while the growth of individual enterprises and the impact on clients' income remain low. It is becoming more and more challenging to further expand the micro-credit outreach, introduce inclusive finance to reach remote villages and very poor people, as well as ensure an impact on the lifestyle of clients. This is due, among other things, to poor infrastructure, particularly the road network and other communication channels, low level business support, as well as the 'entrepreneurship challenge'. This calls for a collaborative effort of all stakeholders in rural development. The present paper examines the opportunities and challenges faced while expanding access to microfinance to poor people in remote areas.