Resource Use Entitlement, Finance And Entrepreneurship In Sub-Saharan Smallholder Agriculture

The "poor but efficient" hypothesis of T.W. Schultz is by now generally accepted. Agricultural progress and entrepreneurship are however hampered by various bottlenecks. The absence of appropriate technology and related knowhow is at least partly the result of misguided perceptions concerning appropriateness and a bias favouring large farmers among agriculturalists. Land tenure arrangements form another obstacle, as does lack of productive assets and factor markets. These considerations prevent entrepreneurial development. Tenure and size relationships are inseperable, with the latter largely a function of entrepreneurial ability. Action to rectify these stumblingblocks will depend on sound financing, which in its turn influences and is influenced by entrepreneurial ability. The crucial factor is not property, but ownership and entitlement. Lease is often preferable to purchase. In land relationships, the land market, which implies at the least rental of use rights, is the crucial factor. Decisions involving financial structure are closely associated with both entrepreneurship and financial results. Credit should be evaluated within this framework. Loan tying can produce perverse behaviour and results, and subsidized interest is seldom beneficial. State lending institutions have a poor track record internationally, while the experience with credit cooperatives appears to be mixed. Small lender groups have proven themselves as appropriate intermediaries, since they foster selfhelp and entrepreneurship. The solution obviously does not lie in only one factor. Synergy exists between technology, tenure, infrastructure and finance in the fostering of entrepreneurship and agricultural progress.