challenges of loan repayment performance of small holder farmers in case of Ambo district, West Shoa zone Oromia regional state, Ethiopia

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.