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Impact Of Agricultural Market Reforms On Smallholder Farmers In ...

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households are not considered credit-worthy and the richest ones are able to self-finance their<br />

investments without resorting to credit. <strong>In</strong>formal credit was used by all groups in similar<br />

proportions (16-21 percent) (see Table 4.1.85).<br />

Characteristics of loans The average size of the loans was 115 thousand FCFA. Loans<br />

from the informal sector were smaller (67 thousand FCFA) compared to those from the formal<br />

sector (146 thousand FCFA). The average loan period was 8 months and the average interest rate<br />

was 2.7 percent per month.<br />

The most common sources of credit are CLCAM (29 percent of the loans), friends (20 percent),<br />

moneylenders (14 percent), and family (10 percent). CLCAM is particularly important in Borgou,<br />

Atacora, and, to a lesser extent, in Atlantique (see Table 4.1.86).<br />

Farm households were asked how the loan funds were used. Almost two-thirds (63 percent) of the<br />

borrowers reported that the funds were used for hiring agricultural laborers (see Table 4.1.87).<br />

Reasons for lack of credit According to the survey, households that did not receive credit<br />

generally had not applied for credit. About 35 percent of the households surveyed applied for<br />

credit and 34 percent received it, implying that almost everyone who applied was able to get a loan<br />

and that almost everyone who didn't get credit also didn't apply. The most important reasons for<br />

not applying for credit were that it was too risky (37 percent), that they had no need for credit (20<br />

percent), and that the formalities were too complicated (see Table 4.1.88).<br />

Perceptions of changes in credit <strong>Farmers</strong> were asked about their perceptions of changes<br />

in the availability of credit since 1992. Most of them (73 percent) said there had been no change,<br />

but more saw improvements (17 percent) than deterioration (7 percent). This pattern was found in<br />

every expenditure category, suggesting that the improvements have not been limited to the higherincome<br />

households (see Table 4.1.89). The opinion that access to credit has improved is<br />

concentrated in Zou and Mono (see Table 4.1.90). The most common reason cited for improved<br />

access to credit was that the area cultivated by the farm household had expanded. The most<br />

common reason cited for reduced access to credit was that interest rates have increased.<br />

67

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