Recent literature on farm credit in the context of rural development displays an exciting variety of conflicting opinions. The argument that farm credit i3 essential to smallholder development is often couched in terms of the "need" for credit, a concept which is frequently undefined and essentially indefinable. The complexity of the subject is often lost sight of behind such semantic and conceptual shortcuts and the discussion of farm credit's role and potential role in rural development is too often carried on without very much examination of the validity of implicit underlying assumptions. These errors may result in an inefficient use of resources in the agricultural, financial and public sectors, compromising the welfare of borrowers and of the community as a whole. Examples relating to Kenya and nearby countries are incorporated into this critique.