The role of a credit guarantee in alleviating credit constraints among coffee farmers' cooperatives in Ethiopia

This study explored the role and effectiveness of a credit guarantee scheme targeting coffee farmers’ cooperatives in Ethiopia. The study, among other things, aims at exploring how provision of a credit guarantee influences supply of institutional credit to coffee farmers’ cooperatives as well as examines cooperatives guaranteed loan utilisation, the resultant changes/impacts and intervening factors. Credit guarantee schemes largely trace their roots in the liberal and neoliberal economic and social contexts. One of the key issues the current study tried to address is examining how a credit guarantee scheme operates in a partially liberal capitalist context where there is pervasive state intervention in the key sectors of the economy, including financial and coffee sectors. The study was conducted in eight zones of the two major coffee producing regions of Ethiopia – Oromia and Southern Nations, Nationalities and Peoples’ regions. A mixed method with structured questionnaires (at two stages), key informant interviews, focus group discussions and extensive observation were used to collect data from primary cooperatives, financial institutions, coffee extension and cooperative experts. Qualitative analytical methods, descriptive statistics and econometric model were used in analysing the data. The study reveals that most primary cooperatives have weak institutional, business and financial capacities, and limited access to institutional services including credit. The findings show that cooperatives generally have limited role in the coffee production end, but they play an important role in its marketing. The study suggests that coffee or multipurpose cooperatives are not ideally suitable to serve as intermediaries for bank loans. The study reveals that the vast majority of the study cooperatives have potential demand for loans, but revealed low actual demand. Different sets of internal (demand side) and external factors influence cooperatives’ potential and actual demand for loan in different ways. The assessment of the guarantee scheme under analysis shows that though most of its design and operational features are in line with international practices, there are some obvious limitations. Low risk coverage level, limitation in the total volume of the guarantee fund, lack of capital enhancement mechanism for the lending banks, short life span of the scheme, lack of flexibility and adaptation and reliance on a single lending bank are among the notable limitations. In terms of utilisation of the guarantee fund and outreach of the lending activity, the scheme attained limited achievements with a low leverage ratio. However, substantial financial additionality was attained among the borrower cooperatives, but the intervention had little impacts in improving the terms and conditions of loans. The positive effects on the economic/business activities of beneficiary cooperatives include acquisition of processing facilities, increase in member size, increased volume of coffee processed and dry cherry traded and improvement in the income generated from such business activities. However, the scheme had limited effects on cooperatives’ human resources and type of management. A number of internal and external factors appear to influence effectiveness of a credit guarantee targeting farmers’ cooperatives. Several recommendations were made. First, there is a need to integrate attractive features into the scheme that can be periodically revised and adapted. These may include raising the risk coverage level especially at the initial stage, including liquidity boosting mechanism, lowering guarantee fee level, devising longer-term arrangement, integrating strong capacity building and technical support and other incentive packages. Second, the lending banks need to develop suitable loan products, revisit and improve their lending terms, requirements and approaches. Third, if they are to effectively demand for and make proper use of such guaranteed loans, cooperatives need to be supported so as to enhance their organisational, business and technical capacities. Fourth, there is a need for the government to further strengthen provision of a more supportive and enabling legal and institutional environments and relax some of the regulatory frameworks so as to facilitate the lending-borrowing activities.Development StudiesD. Litt. et Phil. (Development Studies

Integrating indigenous and exogenous communication channels and capabilities through community-based armyworm forecasting

Many development interventions have failed to generate the desired impact among African resource-poor farmers for reasons including the centralised and top-down approach, lack of active community participation, and over-reliance on external information and technology delivery strategies and channels. The migrant African armyworm, Spodoptera exempta, is among the major challenges threatening livelihoods of millions of farmers in East and Southern Africa. Outbreaks occur suddenly and can devastate crops and pasture. National and regional forecasting services have been operational since the 1960s to provide warning of potential outbreaks. This system relies on information from armyworm moth traps usually operated at district level. These centralised services have a number of difficulties and limitations which include: delays in communicating trap catch data to the forecaster; forecasts are not village specific; forecasts do not reach many farmers; lack of responsibility and local ownership of traps. An innovative approach called community-based armyworm forecasting (CBAF) was developed as a response to these limitations. The new approach has been piloted and tested in several East African countries and found to be effective. CBAF establishes a system that allows each village to have its own traps and trained forecasters who collect and interpret data, and provide village specific forecasts. A recent project on CBAF piloted the approach in 10, 5 and 39 villages of Malawi, Zimbabwe and Tanzania, respectively, in the 1 st year, and in a further 25 and 38 villages of Malawi and Tanzania in the 2 nd year. Discussion with stakeholders, field observations and assessments conducted by the authors indicate that the initiative has generated a number of benefits. It built local capacity, and because of the location specific early warning it enabled farmers to combat the pest more effectively. It was noticed by the authors that local communication channels and folk media play an important role in CBAF, complementing and enhancing the effectiveness of exogenous channels. This paper discusses how CBAF makes effective use of different communication channels and capabilities, and highlights preliminary results.Tant d\u2019interventions de d\ue9veloppement n\u2019ont pas pu g\ue9n\ue9rer un impact satisfaisant parmi les fermiers africains sans resources pour de raisons multiples, dont l\u2019utilisation de l\u2019approche coercitive et centralis\ue9e, le manque d\u2019une participation active de la communaut\ue9 et le fait d\u2019avoir plus d\u2019attachement aux informations, aux strat\ue9gies et guides externes de vulgarization de technologies. Spodoptera exempta, une chenille aussi nomm\ue9e \u201cchenille africain migratrice\u201d est parmi les contraintes majeures aux moyens de subsistance de milliers de fermiers d\u2019Afrique orientale et australe. Son \ue9ruption est soudaine et peut d\ue9vaster des cultures ainsi que des pasturages. Les services nationaux et r\ue9gionaux de pr\ue9diction \ue9taient op\ue9rationnels depuis 1960 pour fournir des alertes sur des irruptions potentielles sur base d\u2019informations collect\ue9es sur des pi\ue8ges tendus aux chenilles au niveau du district. Ces services centralis\ue9s pr\ue9sentent un bon nombre de difficult\ue9s et limitations entre autre, le retard dans la communication des donn\ue9es de pi\ue8ges au pr\ue9visioniste, le manqu\ue9 de sp\ue9cificit\ue9 des pr\ue9visions, la lenteur dans la livraison des pr\ue9visions aux fermiers, le manque de responsabilit\ue9 et d\u2019appropriation locale de ces pi\ue8ges. En r\ue9ponse \ue0 ces limitations, une approche innovatrice appell\ue9e pr\ue9diction des chenilles au niveau communautaire (CBAF) \ue9tait initi\ue9e et test\ue9e dans plusieurs pays d\u2019Afrique de l\u2019Est. Cette approche s\u2019\ue9tait av\ue9r\ue9e efficace \ue0 point qu\u2019il avait permis \ue0 chaque village d\u2019avoir ses propres pi\ue8ges et des pr\ue9visionistes form\ue9s pour la collecte et l\u2019interpr\ue9tation des donn\ue9es ainsi que pour fournir des pr\ue9visions sp\ue9cifiques aux villages.Un projet recent sur CBAF avait ex\ue9cut\ue9 cette approche dans 10, 5 et 39 villages de Malawi, Zimbabwe et Tanzanie, respectivement, dans la premi\ue8re ann\ue9e, et dans plus de 25 et 38 villages de Malawi et Tanzanie au cours de la deuxi\ue8me ann\ue9e. Des r\ue9unions avec des partenaires ainsi que des observations et \ue9valuations sur terrain par des auteurs indiquent combien l\u2019initiative avait \ue9t\ue9 b\ue9n\ue9fique. Le renforcement de capacit\ue9 locale avait \ue9t\ue9 realis\ue9 et les alertes localement sp\ue9cifiques ont permis aux fermiers de combattre avec plus d\u2019efficacit\ue9 la peste. Il \ue9tait remarqu\ue9 que les cha\ueenes de communication locale ansi que les \u201cfolk media\u201d jouent un role important dans CBAF par leur compl\ue9mentarit\ue9 et la promotion de l\u2019efficacit\ue9 des cha\ueenes exog\ue8nes. Cet article discute comment CBAF fait bon usage de diff\ue9rentes cha\ueenes de communication et comp\ue9tences, et met en \ue9vidence les r\ue9sultats pr\ue9liminaires

Integrating indigenous and exogenous communication channels and capabilities through community-based armyworm forecasting

Many development interventions have failed to generate the desired impact among African resource-poor farmers for reasons including the centralised and top-down approach, lack of active community participation, and over-reliance on external information and technology delivery strategies and channels. The migrant African armyworm, Spodoptera exempta, is among the major challenges threatening livelihoods of millions of farmers in East and Southern Africa. Outbreaks occur suddenly and can devastate crops and pasture. National and regional forecasting services have been operational since the 1960s to provide warning of potential outbreaks. This system relies on information from armyworm moth traps usually operated at district level. These centralised services have a number of difficulties and limitations which include: delays in communicating trap catch data to the forecaster; forecasts are not village specific; forecasts do not reach many farmers; lack of responsibility and local ownership of traps. An innovative approach called community-based armyworm forecasting (CBAF) was developed as a response to these limitations. The new approach has been piloted and tested in several East African countries and found to be effective. CBAF establishes a system that allows each village to have its own traps and trained forecasters who collect and interpret data, and provide village specific forecasts. A recent project on CBAF piloted the approach in 10, 5 and 39 villages of Malawi, Zimbabwe and Tanzania, respectively, in the 1 st year, and in a further 25 and 38 villages of Malawi and Tanzania in the 2 nd year. Discussion with stakeholders, field observations and assessments conducted by the authors indicate that the initiative has generated a number of benefits. It built local capacity, and because of the location specific early warning it enabled farmers to combat the pest more effectively. It was noticed by the authors that local communication channels and folk media play an important role in CBAF, complementing and enhancing the effectiveness of exogenous channels. This paper discusses how CBAF makes effective use of different communication channels and capabilities, and highlights preliminary results.Tant d’interventions de développement n’ont pas pu générer un impact satisfaisant parmi les fermiers africains sans resources pour de raisons multiples, dont l’utilisation de l’approche coercitive et centralisée, le manque d’une participation active de la communauté et le fait d’avoir plus d’attachement aux informations, aux stratégies et guides externes de vulgarization de technologies. Spodoptera exempta, une chenille aussi nommée “chenille africain migratrice” est parmi les contraintes majeures aux moyens de subsistance de milliers de fermiers d’Afrique orientale et australe. Son éruption est soudaine et peut dévaster des cultures ainsi que des pasturages. Les services nationaux et régionaux de prédiction étaient opérationnels depuis 1960 pour fournir des alertes sur des irruptions potentielles sur base d’informations collectées sur des pièges tendus aux chenilles au niveau du district. Ces services centralisés présentent un bon nombre de difficultés et limitations entre autre, le retard dans la communication des données de pièges au prévisioniste, le manqué de spécificité des prévisions, la lenteur dans la livraison des prévisions aux fermiers, le manque de responsabilité et d’appropriation locale de ces pièges. En réponse à ces limitations, une approche innovatrice appellée prédiction des chenilles au niveau communautaire (CBAF) était initiée et testée dans plusieurs pays d’Afrique de l’Est. Cette approche s’était avérée efficace à point qu’il avait permis à chaque village d’avoir ses propres pièges et des prévisionistes formés pour la collecte et l’interprétation des données ainsi que pour fournir des prévisions spécifiques aux villages.Un projet recent sur CBAF avait exécuté cette approche dans 10, 5 et 39 villages de Malawi, Zimbabwe et Tanzanie, respectivement, dans la première année, et dans plus de 25 et 38 villages de Malawi et Tanzanie au cours de la deuxième année. Des réunions avec des partenaires ainsi que des observations et évaluations sur terrain par des auteurs indiquent combien l’initiative avait été bénéfique. Le renforcement de capacité locale avait été realisé et les alertes localement spécifiques ont permis aux fermiers de combattre avec plus d’efficacité la peste. Il était remarqué que les chaînes de communication locale ansi que les “folk media” jouent un role important dans CBAF par leur complémentarité et la promotion de l’efficacité des chaînes exogènes. Cet article discute comment CBAF fait bon usage de différentes chaînes de communication et compétences, et met en évidence les résultats préliminaires