2.3. Credit

Little is known about credit in Liberian agriculture. The Development Bank offers credit to commercial farmers at 10 per cent interest. It uses the Rubber Planters Association as its technical agent for an appraisal of all loan applications and requires bank security so that this credit is reserved to "gentlemen farmers". Commercial banks play a very minor role in providing credit to agriculture.

There are no organized credit facilities for peasant farmers. When they need money, they rely on three sources:

  • Chiefs may loan money or goods and, thus, increase their authority. In most cases, such credit is granted without interest, but it is customary to offer a "gift" at the time of repayment. The amount of hidden interest in the form of unpaid labour is unknown.
  • The extended family system requires each person to share his means with his relatives. Thus, wage earners often have to give considerable amounts of their earnings to members of their family. This is not considered as real credit. There is an understanding that the other has to reciprocate if he is in a position to do so. Taxes and school fees are paid, to quite an extent, in that way.
  • Lebanese treaders represent an important source of cash needs, usually as advance on future sales of products. Little is known concerning interest rates, influence on prices paid for products, type and quantity of consumer goods purchased and the total amount of such credits.

  • Some tribes have a kind of savings cooperative. All members pay a small amount, and the sum is given to one person at a time,

Programmes of agricultural development have to take into account that institutions to cater for credit needs in the development process have yet to be built.