Financing small-scale farmers in the Techiman District, Brong Ahafo Region of Ghana

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The desire for food self-sufficiency in C-ham has been a dream of all succeeding governments since independence. However, this dream has become an enigma, for a long time, as the country continues to rely on massive food importation and food aid to supplement her food requirements. One way of realising this dream of self-sufficiency in the country’s food needs is by increasing the productivity of the small-scale farmer. However, the growth andtdeve1opmen of the small-scale farmer is beset with many problems, most important of them being inadequate financing. Small-scale farmers in the Techiman District are no exception to this problem. The study, therefore, set out to analyse the characteristics of the financial constraints facing the small-scale farmers in the Techiman District and the reaction of the financial institutions in solving their financial problems. It was revealed from the study that most of the farmers are illiterates, use traditional implements, depend on rain-fed agriculture, have limited farm sizes and depend on family hands as farm labour. The characteristics of the existing sources of finance also revealed that the formal sources of finance play an insignificant role in financing small-scale farmers in the district not only because of their rigid lending procedures but also due to the poor repayment rate, diversion of loans from the purposes for which they were acquired, refusal to pay the loans and the dispersed nature of the small-scale farmers. These factors combine to make the banks very repulsive in granting loans to farmers. Informal sources such as money-lenders, personal savings, friends and relatives and cash advances from middlemen and traders, therefore, form the backbone for financing small-scale farmers. It was revealed that the informal sources are not only unreliable but also charge high interest rates which means that after repayment of the loan most farmers cannot have enough to meet their social expenditure and for further reinvestment in agriculture. It is against the background of the unreliability and. the high rate of interests of the informal sources that recommendations have been offered to help small-scale farmers get out of their financial problem. These recommendations include the need to increase extension services, formation of co-operative associations, fanner education, opening of more rural banks, the integration of formal and informal sources of finance and improvement in the marketing and distribution networks. It is hoped that these recommendations could help in solving the financial constraints, to the growth and development of small-scale farmers in the Techiman District and. other food producing areas in Ghana.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Science in Development Planning and Management, 1989