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SCREENING CONSIDERATIONS
| 1. |
Lending to individuals within a farmer group can be effective
if penalties for non-repayment by an individual affect the entire
group. Groups therefore have an interest in ensuring that new members
are creditworthy, and in excluding those who are not. |
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| 2. |
Sharing
of information on individual farmer creditworthiness between exporters,
agribusinesses and financial institutions acts as a powerful deterrent
to defaulting. |
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| 3. |
Setting
criteria to assess personal traits and commitment by, for instance,
requiring farmers to show that in the past they have attained a minimum
yield, or to demonstrate their willingness to provide collateral -
say 15% of the loan deposited in a savings account - as security against
the loan. |
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| 4. |
Targeting borrowers with a greater incentive to be included
within a scheme, for example, poorer farmers with good crop management
skills, who would otherwise face considerable difficulty in accessing
services. |
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| 5. |
Where
feasible, targeting more women farmers, who are often more
reliable in repaying loans but may have greater difficulty in obtaining
credit from government schemes. Provision of alternative sources of
credit should be considered so they can benefit from productive opportunities
in the export horticulture sector. |
Such
actions as these should result in lower transaction
costs in credit schemes.
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