Browsing by Author "Musatta, Lawrence Chamikaga"

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    The TRDB credit programme: a case study in loan recovery problems from smallholders tobacco farmers in Tabora Region 1977-1984
    (University of Dar es Salaam, 1985) Musatta, Lawrence Chamikaga
    In this study we were concerned with establishing the root causes of loan default among smallholder tobacco farmers in Tabors region, These are the farmers with an avearage of less than one hectre of tobacco per family. Indeed. as Table 2 in the text illustrates, all faxtinersan the region fall under this category. We took the Tanzania Rural Development Bank as the main source of credit to-these farmers. A sample of thirty villages was taken and a survey conducted to establish their loan repayffrent position. Their response on the causes of loan default, together with that of the bank: staff in the region, was noted. The following hypotheses were tested in the study (i) that there is loan default among farmers because the interest rate is high resulting auto the farmers failure to repay the principal and the interest on it (ii) that the loans given are not based at a credit worthness criterion of collateral, capacity to repay, the honesty of the farmer and the capital he has before the lean is advanced, (iii) that default is there because the whole project is economically enviable. The results confirmed that there is a high default rate among these farmers (50 percent and above), However, the results disproved the association of default with the unviability of the project. The net present values of the projects in each of the three districts growing tobacco were positive. In the Light of our data, we were able to conclude that there were other factors involved in loan delinquency beside economic ones. Some of those factors were extracted from the farmers themselves. We attempted therefore to give a conceptual framework within which remedial policy could be formulated. We have urged the bank to embark on .a kind of research which would reveal the contributive effect of each cause on default. We feel that after ascertaining this effect on default , the remedial policy can bear fruit.