Factors Determining Loan Repayment Performance Among The I.A.D.P. small scale farmers in machakos and kakamega Districts
The problem in this study was to determine factors that influence loan repayment performance among the I.A.D.P. small scale tarmers, and to assess the importance of these factors. In v.iew of the excessive loan defaulting found in many credit programmes in Kenya, an investigation of the factors influencing repayment will form a basis for improvement of loan performance in many credit programmes. The literature suggested that productivity of loan financed enterprises and factors related to it is one of the main factors influencing repayment. It also suggested that farmers motivation is one of the other main factors. If agreement were forthcoming as to which particular productivity factors were involved then part of the role of the credit programmes would be interpreted as requiring a strengthening of its responsibilities towards this end. The status of loan repayment performance among I.A.D.P. farmers was determined and related to factors postulated to have influence on repayment performance. The analysis revealed that loan repayment performance was low (20%) and that the yields of the loan financed enterpr~ses were extremely low compared to the yields of the model farm plans of the I.A.D.P. Three main variables were found to affect repayment significantly; use of purchased inputs, family size and crop yields. Education, and farm wealth do not influence repayment significantly.