Sustainable Rural Credit for Agricultural Development in PNG.

Abstract

The sustainable rural credit refers to maintain the rural financial services in a viable state in perpetuity to ensure that credit is accessible at affordable rate. The sustainability is affected by market failures, agricultural sector failures, structural weakness of farming, inappropriate and high cost delivery system and non-availability of infrastructure and support services. Market approach in smallholders credit can be a long term goal. In the short to medium term smallholders credit shall continue to be a non-market approach. The viability of financial services is adversely affected by the viability of credit delivery as well as receiving systems. The possible policy options to address these problems include regulation and substantiation of credit operation in the short to medium term, credit delivered as a package along with support services, low cost institutional credit, rural savings mobilization, insurance and credit guarantee scheme to cover risks, land reforms and improved infrastructure and support services.