The Demand for Funds from Rural Credit Unions in Togo

The paper shows that credit rationing is not exercised through transaction costs in Togo rural credit unions, as is the case in other financial institutions. Rules of proportionality between deposit holdings and loan amounts determine loan size, while risk-related factors influence the level of borrower transaction costs

Capital Structure Determinants among Manufacturing Enterprises: The Case of Developing Financial Markets in Ghana and The Gambia

The focus of this study is the capital structure of non-farm manufacturing enterprises in low income countries. The study examined the importance of different sources of financing, internal and external, in the capital structure of the firm and the factors explaining entrepreneurial behavior in using different financial contracts. The capital structure was modeled by considering a one-period world within a deterministic approach. A set of testable hypotheses derived from this model was applied to a sample of 325 micro, small and medium scale manufacturing enterprises in Ghana and The Gambia. The findings of this study support the hypotheses that the characteristics of the enterprise, attributes of the entrepreneur, rates of return, interest rates, transaction costs of alternative sources of financing and the respective shares of these securities simultaneously determine the capital structure of the enterprise. Implications of this research suggest that improving formal finance, which is the emphasis of most policies, would be of benefit to all creditworthy firms. But the small size and limited collateral capacity of many firms in the sample suggest that only a few firms will obtain this source of finance. Therefore, informal finance is likely to continue to be important. Trade finance is among the most significant sources of finance in the manufacturing sector. Traders sell inputs to small enterprises on credit and customers sub-contract small enterprises to deliver custom-made products. If formal intervention schemes are necessary, then providing support through economic subs-sectors may be a most efficient method to reach small enterprises

Financing Non-Farm Enterprises: Use of Sub-Sector Analysis in The Gambia

The focus of this study is the financing of non-farm manufacturing enterprises in low income countries. The research utilized sub-sector analysis to examine how linkages among firms, especially for input purchase and output sales, simultaneously determine the financial structure of the firm. The study revealed important differences in the sources of financing among four manufacturing sub-sectors in a sample of 153 micro and small scale enterprises in The Gambia. Implications of the study suggest that if formal intervention schemes are necessary, then providing support through economic subs-sectors may be a most efficient method to reach small enterprises

Who Will Market Fertilizer in Africa's Privatized Input Markets? Evidence from the Gambia

The standard policy prescription is that markets should be privatized in Sub-Saharan Africa. Little analysis has been done about the fertilizer privatization process. This study shows that existing food traders in The Gambia may achieve scope economies by marketing fertilizer, but problems of scale and access to finance exist

Informal Finance and Women in Egypt: "Banks" within Banks

Specialized credit programs for women have emerged recently in many low-income countries. Based on experience in earlier credit programs for other disadvantaged groups, one might expect that these programs for women will encounter difficulties. Relying on research done in Egypt in mid-1993 we suggest an alternative strategy for providing formal financial services to women. Our research focused on informal finance among employees of the Principal Bank for Development and AgriculturaI Credit (PBDAC). Two types of informal finance were studied: self-help financial groups that are called gam’iyas in Egypt, and merchant credits. The study involved a census of gam'iyas operating in 4 village banks, 2 branch banks, one governorate bank, and half the departments in the head office of the PBDAC system. The study covered about 2,500 of PBDAC's 40,000 employees and also included several case studies of bank employees who sold goods to other bank employees on credit. In addition, a case study was done of one community to clarify the extent to which informal finance permeated rural areas. The study found that about 4 in 5 of PBDAC's employees were members of gam'iyas operating within the Bank and that about 9 out of 10 of the households with PBDAC employees participated in gam'iyas. The average person put about $30 each month in gam'iyas, which amounted to 10 to 20 percent of their total bank compensation. Although most of the employees had bank accounts, the majority of these accounts were moribund. In addition, many of the Bank employees also bought goods from other employees on credit. The village study showed that nearly two-thirds of the households participated regularly in gam'iyas, that many of them bought goods from merchants on credit, and that numerous women stored their savings with informal moneykeepers. Many of the merchants in the community competed by selling merchandise and farm inputs on credit. The amount of informal finance found was surprising, given the number of banking facilities that operated in the area studied. We were also surprised by the amount of informal saving that was occurring among people of modest means. The research showed that PBDAC was neither satisfying the financial requirements of its employees nor the demands for financial services by most villagers, especially women. Many Egyptians make deposits in gam'iyas and with moneykeepers and likewise extensively use small and short-term loans from gam'iyas as well as from merchants. Using informal finance as a proxy, banks in general, and PBDAC in particular, are not providing some of the types of financial services that are most popular in Egypt, particularly among women. At the same time, women play a prominent role in many popular forms of informal finance, demonstrating that many of them are financiaIIy literate. PBDAC and other hanks in Egypt are providing few financial services to their own employees, thus encouraging the operation of informal banks within banks. If formal banks cannot compete with informal finance in their own offices, they will be unable to effectively compete with informal finance in the rest of the economy. It appears that PBDAC has opportunities to expand their female client base, especially in rural areas. They might do this by assigning female employees to seek more women clients, especially as depositors. Some of these depositors might later qualify as borrowers if the bank adjusts its lending technology to provide more small and short-term loans. PBDAC might also indirectly expand the informal credit available for women by increasing its formal lending to rural merchants. A moderately successful PBDAC program that attracted women clients would result in millions of Egyptian women having sustained access to formal financial services. In contrast, targeted credit programs for women will likely have difficulties in providing sustained credit access for several thousand women in the country

In search of the rule of law: review in the United Nations system

The New World Order revives interest in the relationship between law and politics in international relations. This relation has always been discussed. But, with the considerable activism displayed by the Security Council over the last years and its dynamic and selective application of its powers under Chapter VII of the Charter, this relation has taken on a new dimension viewed from the perspective of the United Nations. Such a dimension underlines a "constitutional" approach to the United Nations framework: a quest for judicial review with the International Court of Justice as the ultimate guardian of the United Nations. The analysis of judicial review has generally been discussed in the light of the experience of municipal constitutional courts, specifically, of the United States Supreme Court. This constitutional approach should be viewed with caution. The peculiarities of the international system and of the United Nations system determine both a different scope and context for judicial review

Profile of the Niger Credit Union Movement

The West African country of Niger is among the poorest in the world with a population that is inadequately served by the formal financial system and a declining economy with an artificial financial deepening. The establishment of the credit unions movement could become the most important financial intermediary, especially in the rural areas of the country. The investigation of the performance of the CU movement has found the young movement to be healthy and rapidly growing as shown by PEARLS ratios, descriptive statistics, and econometric model results. Several elements remain at the core of the still growing movement and will affect its future growth. That include increase women participation, use of market rates of interest on loans, and using strictly members mobilized savings as loan sources instead of relying on external funds, generating larger loan portfolios by mobilizing more savings and increasing outstanding loans to savings ratios. These elements would prove crucial in determining the long term viability and sustainability of the CUs in Niger