Factors Affecting the Performance of Small Holder Credit Schemes offered by Commercial Banks in Chipata District

Abstract

This study was carried out in Chipata District in Zambia's Eastern Province. The overall focus of this study was to analyse the factors which affect the performance of small holder credit schemes offered by commercial banks to small scale farmers. The Zambia National Commercial Bank and National Savings and Credit Bank offers credit to small scale farmers. The objectives were to determine the productivity levels o f small scale farmers who have received credit from commercial banks, to determine the performance of small scale farmers in terms of loan repayment, to assess the appropriateness of lending policies of the bank and to find out the extent to which commercial banks supervise the way small scale farmers use their loans for. The findings were that in general productivity levels of small scale farmers increase after accessing credit, this can be attributed to availability of farming inputs to farmers when they access credit, on the other hand it was found that these commercial banks do not monitor the loans use by farmers. Research also reviewed that small scale farmers who were accessing these loans were benefiting because their income levels increase though not upon selling their produce because of the long period it takes for them to be paid, the farmers use this income to send their children to school, access health services and generally improve their conditions of living. The key recommendations of this study were that the Zambia National Savings and Credit Bank and Zambia National Commercial Bank must involve farmers in the formulation of these Credit Packages and to embark on extensive Monitoring programs.