Small farmer credit and tenurial problems in Ethiopia

Abstract

The purpose of this thesis is to examine how productive credit can be applied to the problems of Ethiopian small farming, both to raise the level of productivity and to improve the standard of living of the people. It is shown that for these purposes Ethiopia can be divided into two types of region - communal and individual tenure provinces. The communal tenure provinces have two key problems, tenurial and the pressures of population. The former has a deleterious effect upon individual investment incentives through the inalienability of land, and consequent proble~ of mortgage security and the insecurity of tenure. Population pressures affect the scope for producing saving and investment surpluses. Therefore for these communal tenure provinces certain policy recommendations emerge. These involve altering methods of obtaining loans together with an emphasis upon repayments being deducted from sale proceeds. Credit should first be confined to the provision of improvements of a land-saving nature and legislative intervention is also required to ensure the farmer use for this land for a minimum period after making these land-saving improvements. In the individual tenure provinces the key features revolve about problems of tenant's rentals. Population pressures are here lower, which allows the production of surpluses and also ensures that both and and labour-saving improvements increase the levels of production. For these provinces policy recommendations emphasise land reform. Or, if this is not practicable, they advocate tenure reform along the lines of fixed rents (at educed levels) instead of rents as a proportion of production: this latter with guarantees of tenure security. These reforms should ensure investment incentives as credit for labour-saving and land-saving devices will contribute immediate increases in productivity. Show more