University of Khartoum

Agricultural Microfinance In Kharoum State(Case Of Agricultural Bank Of Sudan)

Agricultural Microfinance In Kharoum State(Case Of Agricultural Bank Of Sudan)

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Title: Agricultural Microfinance In Kharoum State(Case Of Agricultural Bank Of Sudan)
Author: Maha Aljack Fadol Sebear
Abstract: This study tries to assess the microfinance in Sudan, taking Agricultural Bank of Sudan (ABS) as formal source of microfinance, to find out the degree of success and failure encountered by the bank. The study also investigates the role of Agricultural Bank of Sudan to finance small producers in Khartoum State who are characterized by lack of collaterals for borrowing from the formal financial sources. The primary data has been collected through questionnaires covered eight branches of Agricultural Bank of Sudan in Khartoum state. The surveyed data was supported by the relevant secondary data sources. The study followed descriptive approaches to show the socio-economic features of the clients of microfinance in Khartoum state, and performance and institutional capacity of Agricultural Bank of Sudan (portfolio classification, services and service delivery, financial resources, and operational and financial sustainability). The findings show that most of the microfinance clients were in active age range, literate, and married. Also the main findings show that Agricultural Bank of Sudan offered only small credits to clients; this means that it ignore the rest of microfinance operations such as savings, insurance and transfers. In addition, the results revealed that, Agricultural Bank of Sudan branches finance the agricultural sector, petty trade and handicrafts. Financial resources of Agricultural Bank of Sudan are depending mainly on the clients’ deposits followed by government support; hence, the loans volumes and annual average number of loans relatively are small with emphasis on the murabaha rather than other modes of finance. Some of Agricultural Bank of Sudan branches try to facilitate microfinance procedures and to empower individuals and groups of small producers and productive families to obtain loans. They require the loans guarantees and conditions for borrowing loans in order to minimize defaults cases. Beside that, Agricultural Bank of Sudan used the profit margins of the loan in order to coverage administration costs. The study reveals that, Agricultural Bank of Sudan is facing many difficulties during its efforts to apply microfinance operations among them the availability of the financial sources, which mainly come from clients deposits. In addition to the low profit margins and low loans of repayment lead to risk at financial portfolio, hence they affect the financial sustainability of microfinance operations in the bank. Although the Central Bank Policy earmarks a certain percentage of the banks portfolios to follow microfinance but it did not specify a microfinance regulations that caters for the special characteristics of micro and small entrepreneurs in terms of securities, documentations required, loan sizes and lending mandates. The study recommended that, Agricultural Bank of Sudan should establish separate microfinance service center to extend its efforts and to realize microfinance objectives particularly increase in client’s income. In addition, Agricultural Bank of Sudan should offer microfinance services not only for small credits but to include all microfinance operations. It is also recommended that, Agricultural Bank of Sudan should have appropriate policies for profit margins, collaterals and loans conditions, loans volumes, flexible procedures, and others, which help in sustaining the bank and at the same time are accepted for clients.
Description: 81 Pages
URI: http://khartoumspace.uofk.edu/handle/123456789/12114
Date: 2015-06-14


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