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close this bookThe Crisis in African Agriculture - Studies in African Political Economy (UNU, 1987, 99 pages)
close this folder5: The second post-independence decade: The food crisis
View the document(introductory text...)
View the documentSmallholder development projects
View the documentThe basic needs strategy
View the documentAgrarian reform
View the documentMore credit facilities
View the documentWater supply
View the documentThe basic needs strategy in the current capitalist crisis

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 alternatives.