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Abstract
Based on analysis of credit supply in Ethiopia, Kenya, Uganda and Nigeria, it is
shown that public credit institutions do not have sufficient funds to meet the demand for livestock
credit and cannot mobilize savings from their clients or other commercial sources for one reason or
another. In addition, available credit does not reach those who need it the most and with whom it
could have the greatest impact due to the application of inappropriate screening procedures and
criteria to determine creditworthiness. The analysis of demand based on borrowing and
nonborrowing sample households using improved dairy technology, it is shown that not all
borrowers borrowed due to liquidity constraint while some borrowers and some nonborrowers had
liquidity constraint but did not have access to adequate credit. Logistic regression analysis show
that sex and education of the household head, training in dairy, prevalence of outstanding loan and
the number of improved cattle on the farm had significant influence on both borrowing and
liquidity status of a household, though the degree and direction of influence were not always the
same in each study country. Based on the findings it is suggested that combining public and
commercial finance could solve the problem of inadequate credit supply while inventory finance to
community level input suppliers and service providers might help in getting credit to worthy and
needy smallholders at lower cost than providing credit to smallholders directly