Abstract:
Access and efficient utilization of revolving fund is very important in increasing small holder
farmers’ income and reducing poverty levels in rural societies. Even though, in recent years
non-governmental organizations, rural saving and credit as well as multipurpose cooperatives
are trying their best to access revolving fund to small holder farmers. However, shortage of
sufficient revolving fund and failure by farmers to repay their loans on time or to repay them at
all has been a serious problem to use a revolving fund in a circulation manner.
Accordingly, the focus of the study was to identify the challenges of providing and repaying
the revolving fund to address small-holder farmers of Layarmachiho woreda and to assess the
contribution of revolving fund to improve the wellbeing of small holder farmers. Using
systematic and stratified sampling technique 150 borrowed and 50 non-borrowed with a total
of 200 were selected from five rural kebeles of the district ensuring that they are active
participants. Qualitative and quantitative research methodologies were employed.
To collect the data the instruments of questioner, interview and focus group discussions were
used. Descriptive statistics using SPSS version 20 has been in use for further analysis. Out of
the total sample targets, 10%, and 5% were complete and non complete defaulters respectively.
The result of the descriptive statistics indicates that lack of access, lack of awareness and high
interest rate had significant effect on revolving fund provision.
On top of this, lack of support and follow up from the lender, low income, poor management
of the borrowers /misusing the fund and lack of infrastructure respectively are some of the
challenges that hold back the borrowers not to repay the revolving fund so as to address the rest
of small holder farmers. Furthermore, the contribution of the revolving fund has been assessed
and 100 % of the respondents confirmed that the revolving fund has improved the wellbeing of
small holder farmers.
Therefore creating a financial system and designing the best strategy with effective
accessibility compatible with the capacity of smallholder farmers must be the concerned
bodies’ top priority .In addition to this; continuous support and follow up from the lending
institutions has to be a serious issue to use a revolving fund in a circulation method so as to
address the rest of small holder farmers who did not get the opportunity. In line with this,
improving the capacity of rural financial cooperatives & institutions must be at the front sight
of the government’s rural financial policy.
