More credit facilities
Here, too, we need to go into some detail. In what spirit is the
increase in credit facilities conceived? We shall turn to the proposals in the
same sources. In the ILO's Employment, Growth and Basic Needs, it is
stated: 'Water charges should generally reflect the true cost of providing
irrigation facilities, and interest rates the real scarcity of capital. The
prices of farm machinery should not in general be subsidized, and those of
fertilizers only when this is clearly necessary to promote their use in the
early stages of their introduction.'
The speech by the President of the World Bank points in the same
direction; 'The fact is that concern over the usurious rates the farmer pays the
money lender has led to unrealistically low rates for institutional credit.'
Thus facilities for access to credit are conceived according to
the cold rules and mechanisms of capitalism. The approach consists in showing
capitalists, notably those in backward linkages from agriculture, that
smallholdings constitute outlets for them that have hitherto been unexploited,
or insufficiently exploited. Then, in organizing credit systems open to
smallholders with the greatest profit for the lenders.
It might be thought that if the small farmers find advantage in it
for them, that might constitute progress as compared to a situation of
stagnation or regression. It therefore becomes a matter of knowing whether the
various imperatives mentioned are compatible, and whether smallholdings can be
modernized through access to these credits.
Nothing is less certain. In fact in The Design for Rural
Development,2 another publication that appeared under the
auspices of the Bank, Uma Lele reports the results of a number of surveys made
in Kenya: 'The experience of the SRDP [Special Rural Development Program]'s
Vihiga maize scheme emphasizes the importance of identifying the precise
constraint to adoption before instituting a credit program.' 'Of the total of
600 farmers selected at random to participate in the Vihiga Maize Credit Program
in 1971, only 54 qualified for credit under the Program's standards of
creditworthiness. Adding another 22 eligible farmers from outside resulted in 76
potential borrowers. Only 63 farmers finally utilized loans.'
This example among many others shows that credit systems with
their built-in demands are beyond the reach of peasants.
Our own experience of the study of a few projects has enabled us
to observe very high interest rates (25% in Senegal). While on the agricultural
projects in Mali the interest rate is relatively low, the state mops up peasant
incomes through very high charges. In addition, the peasants are obliged to make
compulsory sales of large quantities at very low prices to the state grain
marketing office. When all is said and done, the Malian peasant working on
irrigated land found himself short of food during the year (see the letter from
the San rice-growers in the Appendix).
Thus, most of the time, credit systems are beyond the reach of the
peasants. Those who have recourse to them often do so at the risk of food
insecurity because of the debt repayment conditions.
In the last analysis, it can be said that the credit systems as
they are proposed do not constitute a solution for modernizing smallholdings and
improving the living conditions of peasants. On top of that there are the
problems of dependence linked to the new techniques which these credits are
intended to make it possible to acquire.
There will therefore be no choice but to turn to other