Abstract:
Rural communities in Ethiopia face major challenges related to food security and economic stability. For
most people residing in these communities, income earning opportunities are limited to the scale of
surplus produce or wage employment on large scale farms. Today, small farms still provide for the food
security of huge numbers of rural poor, but many have become net buyers of food and contribute little
towards feeding urban populations. The researcher wants to study to assess the challenges of loan
repayment of small holder farmers in study area. The major Objective of this study is to assess the
challenges of which affect the performance of small holder farmers in Ambo Woreda’s district. The
research is descriptive in type and quantitative and qualitative techniques were employed for this study.
Mostly defaulters’ respondents major target groups were of this study. From the total of 5000 small
holder farmers, 152 were included in the sample. On the other hand, from the total of Ambo woreda
borrowed loan credit from Ambo woreda 32 kebeles targeted respondents, 4 kebeles were taken as target
Area of study. Primary data collected from 152 samples selected at random using questionnaire.
Additionally, information was also obtained focus group discussion, Key informant interview and
personal observation. The data has been analyzed by Descriptive statics using SPSSA software. The
identified challenges are lack of investigation loan credit, unbalance of their collateral assets and their
loan credit, they use to loan repayment by selling house animals (cattle’s), another loan from informal
finance and some of personal behavior related to defaulters includes: problems related to the repayment,
challenge of loan into non-income generating activities, business condition of the borrowers and so on.
On the other hand, institutional challenges such as shortage monitoring and supporting them, lack of
training about saving and some others are identified. Political challenges which are related to loan
repayment performance are also recognized as challenge for defaulters in this study. The researcher
suggested improving the performance of small holder farmers in Ambo district. MFI and Government
improve the rule and regulations of lending loan credit; additionally, by supplying agricultural input for
small holder farmers as loan credit in microfinance.
