Assessment of Loan Repayment and Revolving Fund Status of Farmers` Cooperatives: The Case of Libo Kemkem Woreda, South Gondar Zone, Amhara National Regional State, Ethiopia

Abstract

Provision of loan to smallholder farmers is one of the strategies of Ethiopia which is believed to withdraw them out of abject poverty. Various outlays for loan provision are established by private, governmental and nongovernmental organizations in Ethiopia through which loans are channeled to the ultimate beneficiaries. Multipurpose cooperatives are among the channels through which loan is transferred to their members in Libo Kemkem Woreda located in South Gondar Zone of Amhara region, Ethiopia. However, the loan repayment performance of these cooperatives is stringed by many problems and discouraging. Therefore, the general objective of this research study is to assess loan repayment and revolving fund status of farmers` cooperatives in Libo kemekem Woreda of Amhara Region, Ethiopia. Three multipurpose cooperatives were taken purposively as samples from which 120 respondents, 60 defaulters and 60 non defaulters, were taken randomly proportionate to their size. Scheduled interview and discussions were held with 120 sample respondents and focus group discussion participants respectively. Furthermore, secondary data was also taken from Libo Kemkem Woreda Cooperative promotion Office. Descriptive statistics such as mean, frequency, percentage, tables and graphs are used for data analysis. The result of the study revealed that the loan repayment performance of the woreda is very weak and the system of revolving fund adopted by NGOs is not working. Various factors are responsible for the weak repayment performance and malfunctioning of the revolving fund system. Demographic factors such as age of borrowers and family size affect loan repayment. Furthermore, socio-economic as well as institutional factors have also played a significant role on the loan repayment performance. Size of land owned by borrowers, their educational level, involvement in alternative off farm income generating activities, lack of supervision, training & incentives, absence of accountability put in place, and other socio-economic and institutional factors affected loan repayment performance. Various measures such as involving farmers in alternative income generating activities, improving the performance of livestock animals, improving the productivity of land, and strengthening of supervision and training on loan repayment by government as well as nongovernmental organizations are recommended in this field survey.