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Improving the Provision of Financial Services to Micro-entrepreneurs, Emerging Farmers and Agribusiness, Lessons from Kwazulu-Natal
Kuhn, M., Darroch, M., Ortmann, G. & Graham, D.
Journal: Agrekon, 39(1):68-81
Publication Date: 2000
Published by: The Agricultural Economics Association of South Africa
Document Type: Journal Article
How can financial viability and outreach be improved?
This article looks at three development finance institutions (DFIs) which operate in KwaZulu-Natal (KZN) province, and were assessed in 1996/97, to see how they could improve:- Financial viability and
- Outreach
To emerging farmers, agribusiness and micro-entrepreneurs
Findings of assessment:- Improved service quality and emphasis on mobilising savings would help clients and enable DFIs to diversify their portfolios
- Better access to branches and lower loan approval times (improved screening and administrative procedures) could also lower client transaction costs
- Charging a suitable interest rate spread is necessary but not sufficient for lenders to achieve subsidy independence
- Reducing arrears through stricter loan contract enforcement (borrower accountability for loan repayment, lower collateral specific risks, secure and transferable collateral) will also promote financial viability
- Providing both savings and loan services together would reduce borrower access costs, and allow savings to serve as a form of collateral and borrower information for lenders
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