The purpose of this paper is to assess the feasibility of risk-contingent credit (RCC) by presenting an experimental and participatory game designed to explain the concept of RCC to Kenyan pastoralists and dairy farmers. The paper investigates the uptake potential of RCC through qualitative assessment of field experiments and focus groups.
The paper presents a method of community engagement through a participatory game played in a series of Focus Group Discussions (FGDs). The paper also presents theoretical justification of RCC in credit market structure.
The game effectively explains the concept and mechanism of RCC by reflecting local situation and production potential. Participatory exercises within focus group discussions indicate that there exists a strong interest and support for RCC.
The methodology described in this paper can be used in extension programs for promoting innovative rural microcredit in developing countries but should be modified according to the local production and associated weather and market risks.
Micro-insurance and credit program delivery can be improved by the innovative approach of community engagement for explaining financial products.
An earlier version of this paper was presented in the Finance Section of the 2014 Annual Meeting of the Agricultural and Applied Economics Association, Minneapolis Minnesota, July 27-29. This research was supported by US Agency for International Development (USAID) BASIS Assets and Market Access (AMA) Research Program seed grant and W.I. Myers endowment funds, Cornell University. The authors are grateful to Shibia Mohamed and Diba Galgallo for their excellent field support. The authors appreciate generous hospitality provided by the International Livestock Research Institute (Nairobi, Kenya). Finally, the authors thank all the participants in the focus groups and RCC game.
Shee, A., Turvey, C.G. and Woodard, J. (2015), "A field study for assessing risk-contingent credit for Kenyan pastoralists and dairy farmers", Agricultural Finance Review, Vol. 75 No. 3, pp. 330-348. https://doi.org/10.1108/AFR-07-2015-0030Download as .RIS
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