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Rainfed agriculture is inherently risky, with climate change expected to intensify its variability. In the West African Sahel, where agriculture is crucial not only for subsistence but for national and household incomes through cotton production, the need to safeguard farmers' livelihoods against risk is essential. Formal crop insurance providers in such contexts cannot easily rely on traditional models, where indemnifications are based on realized losses, and have instead proposed a stream of index-based insurance products which indemnify clients based on a predefined, and yet objective parameter (the index). One promising product for Burkinabe cotton farmers is, the Double-Trigger Index-Based Insurance (2TIC), whose two-tier triggering mechanism has the potential of reducing moral hazard and minimizing basis risk. This dissertation uses three essays to consider a farmer-centric approach to assessing the implications of this double trigger mechanism for index-based insurance. The first essay explores cotton farmers' judgments of fairness vis-à-vis the 2TIC indemnification system by using Principal Component Analysis (PCA) and Logistic Regression Analyses, and examines if and how these judgments affect decisions to subscribe. The second essay assesses the impact of 2TIC on farmers' cotton-derived net income by employing Coarsened Exact Matching (CEM). The third essay compares the actuarially fair premium of the 2TIC with the commercial premium paid by cotton farmers, by using statistical approaches. The study provides important evidence-based insights into how 2TIC can be improved and promoted by incorporating farmers' needs and perspectives.

Submitted in fulfillment of the requirements of the degree Doctor of Technology: Public Management, Durban University of Technology, Durban, South Africa, 2015. / In 2006, the government-supported microfinance programmes implemented by the Kenyan government started lending credit to Micro and Small Enterprises (MSEs) using a group-lending mode, a change which represented a paradigm shift from individual lending mode. The overall aim of this research is to provide an investigation of whether the transformation of this lending policy was backed by any theoretical and empirical support. Specifically, the entirety of this study is intended to give an insight of what might have influenced the change, what informed it and what might have been overlooked. To achieve clarity and the study aim, the research is compartmentalised into three discrete studies. In the first study, a historical investigation into the factors which hindered MSEs from acquiring credit was undertaken. The second study investigated the reasons MSEs were credit rationed. The third study investigated whether the problems experienced by MSEs, associated with lack of credit access (lack of credit demand and rationing), could have been mitigated by group lending. The research utilised quantitative research design, the first two studies utilised data derived from National MSEs Baseline survey conducted in 1999. The third study utilised primary data collected from micro credit groups of the Kenya Rural Enterprise Programme (K-REP) in 2006 in Nairobi, Kenya. Various economic models and regression analysis were utilised in analysing different outcomes. In particular, the research utilised Univariate Probit, Bivariate Probit and Heckman Two-Stage Models to model various credit access outcomes. The study found that group lending largely mitigated information asymmetry- the main cause of MSEs failure to access credit. However, the study concludes that asymmetric information was not the only source of credit failure in Kenya. For group lending to work, or to have worked, it required support by other pro-MSE programme dynamics. This suggested that the government decision to change policy was partially informed by theory and practice. / D

The use of group lending for poverty alleviation is a widespread feature of modern microfinance. The structure of joint-liability credit - if one member defaults the others are held financially responsible - produces a natural tension between a borrower's social and economic interests. This study integrates theory from economics, sociology, and behavioural experiments to address the question, "How do social and economic mechanisms interact to shape a microcredit group's financial behaviour?" The empirical analysis involves an original dataset from a microfinance institution in Sierra Leone. The total dataset includes 7,025 joint-liability borrowers involved in 47,931 repayment transactions from 2005 to 2011. The empirical methods used are diverse: ethnographic fieldwork, GPS spatial analysis, social affiliation survey design, and multilevel statistical analysis of loan performance data. The original work is structured as three distinct papers. In the first paper, I examine social collateral, the formal use of a borrower's relationships as security against loan default. How does a group's spatial structure affect the efficacy of social collateral? Spatial concentration improves a group's economic performance up to a certain level after which the effect reverses and performance declines. The relationship is driven by a social trade-off between ability and willingness to enforce the loan. Further, groups that consist of multiple spatial fragments produce worse performance. Spatially fragmented groups are prone to splitting into social factions. In the second paper, I question what drives the self-selection process of microcredit group formation. The results show that group leaders prefer members with pre-existing social ties, who are spatially proximate, and have matching business types. The preference for socio-spatial factors is likely motivated by reducing the risk of strategic default by group members. In the third paper, I explore how economic cooperation in small groups evolves over years of repeated interaction. Despite the selective retention of better performing groups, average cooperation rates consistently decline, in terms of contribution and effort. Further, variance across groups continues to increase over 30 months of repeated interaction, suggesting that convergence to a stable cooperation rate has not occurred. Given that group lending exhibits many of the factors found to promote cooperation in laboratory experiments, it is surprising to find such a marked decline in this field setting. Overall, this thesis contributes to economic sociology by dissecting the difficult trade-offs between social and economic motives in group lending and offers policy implications for microfinance institutions regarding group formation heuristics, contract design, and loan management.

Poor loan repayment causes the decline and failure of some microfinance institutions. The purpose of this qualitative multiple case study was to explore strategies that microfinance (MFI) leaders use to reduce loan default in the base of the pyramid market. The study population included 6 MFI leaders, 12 borrower community-based groups, and 4 staff members of the Adventist Development and Relief Agency (ADRA Rwanda) who reduced MFI loan default in Rwanda. Data were collected through semistructured interviews with 3 MFI leaders, 3 ADRA Rwanda staff members, and 3 members of borrower groups. Data were also collected through focus groups with 3 borrower community-based groups comprising 6 to 8 members. Additional data were collected through the analysis of MFI and ADRA Rwanda organizational documents. The Varian group lending model was the conceptual framework for the study. Data analysis involved methodological triangulation and the Gadamerian hermeneutics framework of interpretation. Four major themes emerged: intrapreneurship and environmental business opportunities, favorable loan repayment conditions, strategies for choosing borrower groups, and loan use monitoring. A sustainable microfinance institution can produce social change by providing microfinance loans that clients can use to start and grow microenterprises that can become the source of income for improving the lives of clients and their family members. Findings may also be used to create economic growth through the participation of more people in economic activities in the base of the pyramid market.