Agricultural credit repayment behaviour of smallholder farmers in farmer-based organisations (FBOs) under government and NGO credit programs in Ghana

Purpose The availability of agricultural credit for smallholder farmers in developing countries is widely recognised as crucial for improving their productivity. This paper explores the loan repayment behaviour of smallholder farmers in farmer-based organisations (FBOs) under Ghana's government and NGO credit programs. Design/methodology/approach The analysis is based on 30 qualitative interviews with FBO members, agricultural extension agents and NGO officials in two administrative districts in Ghana. Findings Credit recovery is higher under NGO credit programs than government programs. The source of credit and the level of participation by the credit provider primarily shape the loan repayment behaviour of smallholder farmers in FBOs. The mere formation of FBOs to deliver credit to smallholder farmers would not necessarily lead to improved credit delivery and loan recovery – particularly during the early stages of FBO development – unless the loan providers participate effectively in the activities of FBOs such as ensuring the timely delivery of loans, monitoring how the loan is invested and participating actively in loan recovery during harvesting of crops. Practical implications More than just setting up FBOs is required to ensure effective repayment among FBOs and their members. Who provides the credit (i.e. whether NGO or government) and the effective participation of loan providers are necessary for effective loan recovery. Originality/value A significant novelty of this paper is that it compares credit recovery in FBOs that were set up and managed by both government agencies and NGOs, which reveals that loan repayment among FBOs is higher under NGO credit programs than government credit programs.