| 9. Repayment strategies Under the current informal credit systems households would appear to obtain both short term and long term credit. For instance, salaam is seasonal in its nature, typically paid after the harvest of the winter crops. Similarly, the purchase of agricultural commodities on credit such as fertiliser is often seasonal. However, larger cash loans such as those obtained through the anawat system are for at least twelve months whilst qarze hasana may be both short term and long term, depending on the agreement reached between the two parties.
Given the poor opium poppy harvest in 1998, respondents from all socio-economic groups reported that they would have considerable problems both repaying the seasonal debts that they had incurred and servicing their longer term debts. In particular, the dramatic fall in the yield of opium in 1998 in the target districts of Ghorak, Khakrez and Maiwand led to a significant shortfall in the opium available for repaying their salaam.5/ Indeed, many respondents claimed that after deducting both the opium for agricultural taxes, known as usher, and the share used as payment for hired labour, there would be insufficient opium to repay both the debts they had incurred through the salaam system and the cash debt that they had generated with shopkeepers or traders.
At the time of the fieldwork, four weeks after the harvest of opium poppy, 60% of respondents had failed to repay the seasonal debts they had incurred during the winter cropping season. During a number of interviews respondents became quite distressed about their financial situation. Indeed, one respondent began to cry as he described his inability to repay his existing debts due to an extremely poor harvest and insufficient collateral to obtain further loans.
Where households were not able to repay their existing debts, respondents indicated that they would initially seek to reschedule their debt with the lender. Respondents suggested that delaying the payment of existing debts was at the sole discretion of the lender. They further suggested that such delays were often far easier to obtain for those who owned land. Respondents indicated that the terms of rescheduling debts were unfavourable with the amount of the loan doubling or tripling where repayment is delayed over a twelve-month period
Respondents revealed that lenders expected debts incurred through salaam to be paid promptly, particularly when they had obtained salaam on opium and from a lender from outside their own village. However, in Shinwar, respondents claimed that they had rescheduled the repayment of their salaam with local opium traders. Reports indicated that opium traders expected twice the amount of opium in 1999 from those households who could not repay the agreed amount in 1998. Respondents indicated that this allowed traders to accrue substantial profits and secure delivery of increased quantities of opium.
To repay the advances they had received, some respondents indicated that they had purchased opium from other farmers or traders. Given the substantial increase in the price of opium in Qandahar between May and June, those who were compelled to purchase opium on the open market to repay their salaam debt, were found to be paying as much as four times the value of the original advance given.6/
The great majority of landless respondents reported that they had obtained credit via the anawat system in order to purchase the opium required to repay their salaam. Given the high mark-up accrued by the lender under anawat system, the real cost of repaying the salaam initially received, could be as much as six times the original loan, a significant loss particularly to the most vulnerable.
Many landless respondents, and some owner cultivators, indicated that wage labour was a popular strategy for repaying their existing debts. These jobs would be taken on a day basis during slumps in agricultural activity. However, local opportunities were usually limited to the collection of firewood, and simple construction work, such as building mud-walls, or karez cleaning. Whilst it was recognised that wage labour opportunities did exist across the border in both Pakistan and Iran, only one respondent indicated that he was considering migrating. This respondent believed he could repay the walwar he owed to his parents-in-law by obtaining a job as a brick maker in Pakistan.
A number of respondents also indicated that they would increase opium poppy cultivation as a means of repaying their loans. For instance, in Shinwar District 25% of respondents indicated that they would increase the share of land that they cultivated with opium poppy in the 1998/99 growing season to repay their current debts. Future fieldwork during the winter cropping season of 1998/99 will allow these claims to be verified.
Respondents also cited the sale or rental of household assets as a strategy for the repayment of household debts. Indeed a number of respondents reported that they had sold livestock to purchase the amount of opium they owed as salaam.
The sale of land was considered a last resort by those respondents that owned land, and none admitted to having ever used this strategy in order to repay debts. However, a number of respondents mentioned that they did know of such cases. Whilst respondents suggested that the sale of land would not be considered unless they had exhausted all other options, offering the use of land to a neighbouring villager on a temporary basis, was viewed as a viable strategy for repaying existing debts.7/
In Shinwar, respondents indicated that under this system, known as grau, irrigation water rights to karez were also leased as a payment for existing debts. Reports indicated that this type of repayment arrangement is initially agreed upon for either one agricultural season or a calendar year. Those respondents who had entered into a grau agreement reported that regaining the use of their land or irrigation water was their prime priority.
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