Agricultural credit under economic liberalization and Islamization in Sudan

Adam B. Elhiraika and Sayed A. Ahmed

Working Papers from African Economic Research Consortium

Abstract: This study uses survey data to examine the operations of the agrarian credit market, formal and informal, in Sudan under conditions of recent economic liberalization and Islamization; the latter does not allow interest rate fixing. In addition to descriptive analysis, the study specifies and estimates a model of farm household participation in the credit market. The survey results show a substantial increase in formal borrowing in agriculture, but relatively low informal credit. Implicit interest rates are found to be high in the formal segment compared with their previous levels, and the levels of formal and informal agrarian rates of interest are comparable. The research concludes that there is a need for enhanced institutional financial intermediation in the agrarian credit market as well as scope for the promotion of savings and credit associations among farmers.

Date: 1998-02-05
Note: African Economic Research Consortium
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