Rural Financial Intermediation in African Countries
Business Adaption to Varying National Recoveries, L.L. Waters and Thomas P. Hustad eds., Indiana University Press, Bloomington Ind., pp. 47-54, 1983
Posted: 14 Jun 2012
Date Written: 1983
The setting up of banking facilities in rural areas may have a significant impact on savings mobilization and contribute to the monetization of the economy as well as to agricultural development. Unfortunately this has not been the case in most of African countries south of Sahara. The paper contends that commercial banks following the “orthodox” way of working have given a little contribution to the development of the small farming sector. In fact, this traditional banking behaviour along with other factors has brought about a net drainage of funds. On the other hand, the institutional answer enacted by authorities to meet the emerging financial needs of the rural sector is to be found in the establishment of financial bodies that, however, have very little to do with banks: they could more appropriately be qualified as either “loan windows” or “deposit windows”. This particular feature has hindered an effective rural savings mobilization.
Keywords: Africa, small farming, financial intermediation
JEL Classification: O16, Q14
Suggested Citation: Suggested Citation