Documente Academic
Documente Profesional
Documente Cultură
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O
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The research design used in the study would be
exploratory-descriptive research design. It is exploratory
in that the major emphasis would be on the discovery ad
trying to get more insight on the effect of agricultural
finance on SME growth. The design would also be
descriptive as the effect of the finance on the growth of
SMEs would be explained.
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The level of education is important as it
determines the channels of communication used
by the respondent, degree of confidence and the
ease of acquisition of new managerial skills. The
education level also determines the level of
confidence in approaching financial institutions.
In order to determine the education levels
respondents were asked to indicate their
education levels and the results are tabulated in
table
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Entrepreneurs found at the business were asked
to indicate the nature of the ownership of the
business. This was defined as sole
proprietorship, partnership, limited company and
any other form of ownership. No responses were
received from any other form of ownership.
Overwhelmingly most of the businesses are sole
proprietorship. The frequency is indicated in the
chart below.
Business ownership
Ownership status of respondents
artnership
ownership form
i ited o pan
o e propreitership
percentage
Agricultural finance impact was best
reflected through increase in sales volume
(40 per cent), increase in profit (10 per
cent) and increase in number of
employees at 12 per cent, increase in
production levels is at 25 per cent. The
results are shown on the figure 4 below:
Major areas of business growth
Major areas of business business
growth
others
New businesses
in rease in sto
new e o ees
rofits
ro u tion
sa es o u e
÷equency
The entrepreneurs also indicated the
entrepreneurial finance had an overall
impact on the growth of the business (7
per cent of the respondents) while 20 per
cent of the businesses had declined as a
result of the agricultural finance obtained.
Sources of seed capital
O
thers
ommercial ank
ersonal sa ings
0 10 20 0 40 50 0 70
r y
Lending procedures
Easy loan security system was cited as the main
reason for choosing a certain lending institution
(4 per cent) while no restrictions on loan use
was also cited as an important factor ( per
cent).Simple application procedures is also a
critical factor ( 5 per cent).Fast processing of
loan applications was also cited by 0 per cent
of the respondents as an important factor in
choosing a financial institution to cater for the
financial needs of the borrower.
Characteristics of lending
institutions
n other
i le a lication rocedures
ro i it to lender offices
Role of AFC In Provision Of
Agricultural Finance
The researcher sought to find out whether AFC has been fulfilling its
mandate. The results indicate that very few of the respondents have
obtained credit from AFC due to various reasons mostly based on
lending procedures which are too complex and the strict collateral
requirements. Majority of the respondents (89 per cent) of the
respondents had not obtained credit from the organization. Out of
the three who had received financing from AFC each had received
an average of Ksh 200,000 each with the highest having received
Ksh 00,000 from the organization.
The major reasons for not receiving financing from AFC was the
requirement of land as collateral which many do not have as the
land they own is held communally. Further many respondents were
unhappy with the restriction on loan use as there was the
requirement that the applicant must have 25 per cent contribution in
either cash or kind which deterred many would be applicants.
RECOMMMEDATIONS
When choosing financial institutions to approach for credit, 5 per
cent of potential borrowers would look at the interest rates charged
by the lender from the findings of the research. On establishing that
they are relatively cheap in the market, then they would consider the
following issues in order of priority . 0 per cent of the respondents
would first consider whether the lending institution would consider
adjusting the repayment premiums in this respect) therefore they
would prefer MFIs which would penalize the group members to
cover for this shortfall rather than sell the individuals assets. 2 per
cent of the respondents consider the speed of processing loans
third is what collateral the institutions would ask for then fourth
whether the lender might consider rescheduling the loan in times of
misfortunes. Application procedures, proximity to offices or their
officers and size of loan available rank fifth sixth and seventh
respectively. A significant minority of entrepreneurs are happy with
the way things are.
When choosing financial institutions to approach for credit, 5 per
cent of potential borrowers would look at the interest rates charged
by the lender from the findings of the research. On establishing that
they are relatively cheap in the market, then they would consider the
following issues in order of priority . 0 per cent of the respondents
would first consider whether the lending institution would consider
adjusting the repayment premiums in this respect) therefore they
would prefer MFIs which would penalize the group members to
cover for this shortfall rather than sell the individuals assets. 2 per
cent of the respondents consider the speed of processing loans
third is what collateral the institutions would ask for then fourth
whether the lender might consider rescheduling the loan in times of
misfortunes. Application procedures, proximity to offices or their
officers and size of loan available rank fifth sixth and seventh
respectively. A significant minority of entrepreneurs are happy with
the way things are.
CONCLUSIONS
There is need to develop lending policies
that recognize that financial services are
part of an interactive system of financial
institutions, financial infrastructure, legal
and regulatory framework, social and
cultural norms. There is need to simplify
lending procedures and develop unique
loan products that cater for the needs of
the entrepreneurs in the agricultural
sector.
All the stakeholders must build and enhance the
business skill of the entrepreneurs in order to increase
their growth potential .When the business capacity of the
entrepreneurs is high, the can visualize the direction
which they want their business to grow in the future. As a
result, with increased capacity, they can be able to
develop comprehensive business plans to achieve that
vision and as a result increase the demand for credit in
the market , improve productivity and employment and
generally assist the government to meet its development
agenda. Treating the farm household as a financial unit
integrating a variety of economic activities, and basing
lending decisions on repayment capacity rather than how
funds are utilized is also important to ensure more flow
of funds to the MSEs that require agricultural finance.
More research should be conducted on methods
of information gathering on the borrowers to
reduce default rates and strengthening capacity
of the agricultural finance institutions in order to
enhance credit delivery. Further there is need to
carry out research on how agricultural finance
providers can adapt their services to become
more flexible in timing, amounts disbursed and
repayment schedules