The main objective of the study was to investigate the causes underlining small-farmers
default on bank loan repayments in the North West Province. One hundred and sixty
farmers were randomly selected to be part of the sample. Questionnaires were issued to
both farmers and bank officials. Descriptive statistics, correlation and regression models
were used to analyse the data. The overall results indicate that most of the small farmers
are in the old age category (58 years on average) with very low educational level. This
scenario poses a challenge to the stakeholders in agriculture specifically the succession
plan to these elderly people when they leave agriculture due to retirement.
It was revealed by the study that the farmers do not keep either financial or production
records. The analysis shows that the small farmers lack skills in financial management
therefore, they are unable to execute the prerequisite to modern farming which are
literacy and numeracy as indicated by Woohall et. al.,( 1985).
Most of the respondents have outstanding debt from Agribank yet they received loans
from Landbank. Because of their low production and other many responsibilities, they
are unable to repay loan instalments thus leading to loan default to their current
financial supplier, which is Landbank. Lack of monitoring of loan funds was identified as
one of the causes of the farmers Joan default.
The analysis also indicates that the small farmers have access to finance but the major
problem is lack of financial management skills, more involvement in household
responsibilities, and lack of technical assistance from relevant stakeholders like
extension officers and project managers from the bank or from the Department of
Agriculture. Since the Land bank have no field officers to assist the farmers, it is
recommended that the bank should have field officers to assist farmers in their business,
especially with production, marketing, financial management and farm management
Skills. The inability of the farmers to access good value markets for their products was
identified as one of the problems, which led to loan default because the farmers are
unable to market their products at the right time for good value in excess of their cost. It
is recommended that financial institutions should assist their clients to access better
markets for their products for better price which will in turn give them better income in
order to repay their loans. / M.Sc. (Agric. Economics) North-West University, Mafikeng Campus, 2005
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nwu/oai:dspace.nwu.ac.za:10394/11284 |
| Date | January 2005 |
| Creators | Moshabele, Magape Edwin |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
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