LOAN ASSESSMENT AMONG AGRIBUSINESS ENTERPRISE
In most African nations where their way of living is mostly agricultural and fishing where individual and organizations are limited to their own knowledge and skills, their resources and capital may not be enough to handle the growing demand of customers. The expansion of such enterprise is locked by their own limits, these groups and individuals need a highly remote assistance from the government, banks and other Non Government Organizations (NGO) to build a stronger business enterprise, for them to be able to cope up with the continuous growth that is highly needed for them to survive they will eventually resort into something like loans and government assistance.
This has been some of the common practices in Ghana. It can become a major disadvantage for people if they are not qualified in such activities and credits for they will usually be dependent on their self even if they do not have the capacity. Their business enterprise if not taken consideration by the government or banks usually closed or bankrupt. They may not be qualified if they find out that the business do not have the potential to produce or to grow.
The Micro-financing agencies All in all, the borrower who qualifies to financing should go to the following process of training and strategy to make their credits work for them, basically this is a very advantageous activity on the part of the borrower although it may be hard for the borrowers due to lack of education.
ADB or Agricultural Development Bank have opened their finance to agricultural sector during the early 70’s but poor repayment of borrowers makes them more strict in lending to restructured their program only to qualified individuals. Most of this financing institution would only require a minimum basic requirement depending on the ability of the borrower to pay, thus their credit limit will be based upon.
Farmers and agribusiness sectors tend to gain capital to informal lenders or “susu” these are people or organizations that allows the farmers an easy loan for their agricultural activities without getting to the process like the banks but most of the time they are the ones who have a bigger interest rates upon payment. They can also be neighbors or relatives that agreed to lend loans for immediate needs of farmers or agribusiness. These susu collectors can transact or compromise collection according to the farmer’s capacity to pay.
Micro-financing loans like (GHAMFIN) Ghana Micro-financing Institutions Network. For farmers and agribusiness groups in order to borrow must form themselves at least 25 to 40 members. These groups should have their own individual responsibility to paid but they also have a group participation responsibility which means that if a certain member or individual do not have the chance to pay would mean that all members must contribute to the group in order to fulfill their organization obligation. This is called a co workers collateral. On a typical scenario which sometimes provoke an argument or a fight between members in order to pay such amount. However this micro-financing calls for cooperation among group members so that loans can easily be released upon application.
Inventory Credit Scheme by RMFI or Rural Micro-Financing Institution of World bank for farmers who want to generate funds can use their inventories like high value crops, oil palm, cashew etc. as collateral. They use their crops in exchange for loan for security purpose since they do not have the ability to show financial statement. This process allows them to clear their debt and easily allow them for a re-loan upon completion of various crops submission to the warehouse of RMFI.
Government Credit Programs are generated for farmers, fisherman and agribusiness livestock owner a number or ways to give loans for poverty alleviation scheme. This are politically motivated funds disburse through NGO who are the one to decide who will be qualified. The government uses a so called relief and highly distributed to enterprising individuals but the interest rate is ranging from 20 percent which is quiet fair to agribusiness. The recovery rate of payment only reaches to 60 to 70 percent annually. The credit or loan given by the government or banks may only be given to qualified organization if they have the qualification to repay the amount they receive, if they have the character and skills to incorporate the responsibility to the community. That is why it is so hard to believe that the mission of such agencies is to alleviate poverty and uplift the moral of Small and Medium Enterprise because it is not easy to borrow such loans.
In fairness to most financing organizations, all of them have their own unique ways and means to lend such amount. That is why we can say that the difficulty or process of acquiring loans from these groups can be entirely based upon the borrower’s accountability and honesty to pay.
Credit:ivythesis.typepad.com
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