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Sustainable Agriculture Extension Manual
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Credit for farm activities
Credit is the provision of loans by a bank or other organization. The loans can be in cash or in kind (eg, seeds, livestock, fertilizer); they can be granted to individuals or to groups. This section describes cash on in-kind credit; the section on Livestock micro-credit describes a special form of credit used with animals.
In the group approach to credit, needy members of the community are identified and organized into groups. The groups help to ensure that loans are repaid, since the members press each other to honour their commitments to repay. This approach also eases the management of funds. Once the groups are organized and have legal status, they are trained on how to manage heir loans. Training may also be given on the activities the funds can be spent on. The loans are then given to the community, mostly in kind, though in some cases cash is given. The funds are given at a low interest rate which the farmers can easily pay. A brief period (called the "grace period") is then given before the farmers have to start repaying the loans. The group arrangement is used only for the purpose of accessing the credit; payment is done by the individuals rather than the group as a whole.
Credit enables poor members of society to acquire what they would not otherwise be able to with their limited resources. When properly done and successful, the community members are empowered because they have added to their assets and are able to manage other forms of credit. The process thus develops the community's capacity to organize itself for a particular activity.
Credit programmes can be run in any community where credit can help solve problems. Group-credit programmes work best where there is some level of cohesiveness within the community. The community should also be willing to undertake the project.
Procedure 
1. Identify the area where the project will be implemented.
2. Identify project beneficiaries. This could be done using participatory methods such as wealth ranking (see the section on Participatory agricultural extension).
3. Create awareness on the kind of credit programme to be implemented.
4. Organize the target beneficiaries into groups and make sure they are registered with both the organization and the government. The purpose of this is to allow monitoring of the credit activities. In some countries registration with the government is required.
5. 
Conduct
training on all aspects of the project.
6. Release the loans when you are sure the beneficiaries have been adequately prepared to receive them.
7. Conduct on-going training and extension to follow up the planned activities.
8. Start collecting the loan repayments after the grace period. Repayments can be made in kind or in cash. Depending on the agreement reached with the beneficiaries.
Credit for irrigation in Kenya
The Smallholder Irrigation Scheme Development Organization (SISDO) develops small-scale group-based irrigation infrastructure. It targets horticultural crops for both the local and international markets. SISDO provides credit without collateral to self-selecting groups. The groups co-guarantee the loans given to every member.
SISDO offers credit for various types of enterprises:
- Group-based gravity-fed irrigation infrastructure (developed with and managed by the farmers).
- Pump-fed irrigation systems for clusters of individual farmers.
- Farm inputs for groups of farmers with irrigation water so they can produce horticultural crops.
- Zero-grazing units for clusters of farmer groups.
The provision of credit starts with a request by the community to SISDO. Several meetings follow to explain SISDO's objectives and to train the farmers. Screening is also done at this time to determine the viability of the project, and to gauge the group's cohesiveness and eligibility.
Before farmers can get loans, they must be organized into groups and registered with the relevant ministry, be willing to meet every month, and agree to produce only horticultural products. Farmers applying for credit must reside on the farms to be irrigated. They are required to pay 15% of the project cost as a measure of their commitment.
Loan application forms are distributed at the group meeting for individuals to fill in. Once the groups have agreed to co-guarantee each other, the documents are signed by the group officials. SISDO then disburses the loan to the group. It is the task of the group to distribute the loan to its members. The loan is usually paid in kind. SISDO's role is to ensure that the rules and procedures are followed. The groups then ensure that the loans are repaid on time each month. —For more information, contact Grace Njoka, SISDO, Kenya.
Seed credit in Lesotho 
In 1995, the Rural Self-help Development Association (RSDA) began promoting the Machobane farming system in Lesotho (see the section on The Machobane farming system in Lesotho). RSDA developed an approach to assist, train, and provide technical assistance to small farmers.
Community campaigns are conducted to promote the Machobane system. Farmers who are interested in trying it sign up with RSDA, and pay a small annual service fee (7.50 maloti). They then attend a training course which includes an orientation to the farming system, visits to farmers' fields, and demonstrations. Mr Machobane, the inventor of the farming system that bears his name, is involved in the orientation and demonstration activities. The farmers then measure and plough a 0.4 ha (1 acre) plot, and prepare organic fertilizer for incorporation into the soil.
RSDA makes the farmers an in-kind loan of the seeds to be planted. This includes: 5 kg of wheat, 5 kg of peas, 5 kg of maize, 5 kg of sorghum, 5 kg of beans, and 300 kg of seed potatoes. The farmers provide their own seeds for other crops, such as pumpkin and watermelon. This loan of seeds is given only once.
RSDA provides extension services to the farmers throughout the year, delivering seeds and offering further training on the Machobane farming system. RSDA plans to provide technical assistance for up to 5 years. Old and new farmers alike are required to pay the annual service fee, for which they receive the extension services and training.
After the harvest, RSDA assesses the production records with the farmers, who are then expected to repay their seed loan in kind. They must return the following seed amounts: 6 kg of wheat, 6 kg of peas, 6 kg of maize, 6 kg of sorghum, 6 kg of beans, and 360 kg of seed potatoes. —For more information, contact Tsepozi Mathamba, RSDA, Lesotho.
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