Rural Finance and the Role of Development Banks: Recent Experience in South Africa
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Publisher:Ohio State University. Department of Agricultural, Environmental, and Development Economics
Series/Report no.:Ohio State University. Department of Agricultural, Environmental, and Development Economics. ESO (Economics and Sociology Occasional Paper). No. 2570
In the quest to expand access to financial services in rural areas the agricultural development bank is reexamined. Four issues that need to be addressed in the restructuring of these institutions are discussed, viz. the arguments for intervention, the rules that need to be applied in the context of the new approach to development finance, the management of the restructuring process and the politics of change. These issues or rules are applied to the restructuring process of retail development banks at the provincial level in South Africa. It is illustrated that for successful transformation political will and a shared vision are also necessities. The impact of appropriate transformation is quantitatively illustrated by the impact on financial self-sustainability in one such bank when these aspects have been adequately addressed in the transformation process and the failure in the remaining institutions when they are not.
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