MANAGING SMALL FARMER CREDIT PROGRAMS : A CASE STUDY IN HONDURAS

This study, part of A.I.D."s Small Farmer Credit Project, details an effort to improve the credit management and lending practices of the National Agricultural Development Bank of Honduras. The information collecting and processing component involved several activities. Loan files were investigated to determine the relation of the Bank"s use of enterprise budgets to loan authorization, cash disbursement, and loan default. Farm records were analyzed for information on prices, resources, profitability, cash flow, and other variables. Next, a recordkeeping system was developed, tested, and modified in Jutiapa, Las Playitas, Ajuterique, and El Matazano. Simple, accurate crop and livestock enterprise budgets and a system for collecting input and product prices were then instituted in the 13 Bank regions. The loan administration and evaluation component involved many policy and procedural changes, such as adding fixed costs to production cost estimates and including living expenses in calculating loan repayment, only some of which were implemented. A client classification scheme was created to tailor loan processing to different clients and amounts. New, standardized forms and procedures were designed to replace the existing tedious small loan application system. Loan officer field books and activity logs with information on enterprise budgets, product and input prices, and clients were also developed. To take advantage of the lower overhead on group loans, a methodology for their administration was developed and implemented in three areas. The training component was heavily oriented to farm management and concentrated on farm financial analysis, investment anlysis, and farm recordkeeping as well as on training a cadre of teachers. Although the project"s narrow focus and short duration did not impede achievement of objectives, its future impact is dependent upon the Bank"s strength and commitment to keeping trained people in key positions. A list of 7 English and Spanish references (l979-80) is appended.