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Abstract
Three development finance institutions (DFIs) which operate in KwaZulu-Natal (KZN)
province were assessed in 1996/97 to see how they could improve financial viability and
outreach to emerging farmers, agribusiness and micro-entrepreneurs. Improved service
quality and emphasis on mobilising savings would help clients and enable the DFIs to
diversify their portfolios. Better access to branches and lower loan approval times (improved
screening and administrative procedures) could also lower client transaction costs. Charging
a suitable interest rate spread is necessary but not sufficient for lenders to achieve subsidy
independence. Reducing arrears through stricter loan contract enforcement (borrower
accountability for loan repayment, lower collateral specific risks, secure and transferable
collateral) will also promote financial viability. Providing both savings and loan services
together would reduce borrower access costs, and allow savings to serve as a form of collateral
and borrower information for lenders.