their clients to come have relatively compared to the other lenders.
low
repayment
rates
Moreover, repayment rates of the different credit institutions are also influenced by the frequency of payment. Specifically, based on the result of the case study, if the lender requires daily or weekly remittance of payments, repayment rate is higher compared to those who applied monthly, quarterly and annual basis. Also, the rate of turnover of money is faster, thus improving the liquidity of the lender and its capability to lend to other borrowers.
Income
from
and
Cost
of
Lending
Only three of the respondents provided information on their net income (the CPN Consortium/NMDB, TILCO and VCF). The others said this information is highly confidential and therefore, cannot be provided to the research teamm Thus, the analysis of the financial soundness and viability of the institutions is constrained. Based on the reports, TILco registered a higher net income (_I.167 million per annum) compared to the income of the NMDB from the consortium (R38,g20) and VCF (R868,054.04) (Table 961. In terms of cost of lending, it was found out that the lending investors incur the lowest lending, cost. Lie I, 2, and 3 exhibited equal cost of lending of PO.03 for every one peso lent LI4 on the other hand, reported that it incurred a total cost of PTO0,O00 per month. or
(m03_)-
The CPN consortium reported the highest cost of lending amounting to PI.05 million. This is about 22 percent of their total income. According to TILCO, VCF and LPF their lending cost amounts to 12 percent, 29.17 percent, and 24 percent of their total income, respectively. This implies that TILCO, the institution that registered the highest income and serviced the most number of small farmers has a very efficient and effective mechanism. Quite expectedly, not one among the informal lenders gave information on the cost they incurred from lending. This could be due to a number of reasons: (I) they probably do not really take account of all the costs associated with their lending operations since lending is just one of the activities that they undertake with the borrowers; or (2) their cost of lending is very small compared to the interest rate that they are charging and the income that they are getting from their lending operations.
1A6