Debt Reduction through the Participation of Ban Na Chai Community, Chai Nat province

Abstract

This research had the following objectives: 1) to study the accumulated debt situation in Ban Na Chai community (which is pseudonymous); 2) to analyze the causes of the community's debt burden; and 3) to propose solutions to the debt problem in the community. The study took an area-based approach, with a team that included the community members as well as university researchers. They gathered quantitative and qualitative data from 90 households, using 11 key informants for focus groups and brainstorming sessions. The research tools comprised questionnaires and guidelines. Percentage and content analysis were used to analyze the collected data. The results of the research could be summarized in line with its three objectives: 1) debt within the Ban Na Chai community had been steadily declining. Out of the 90 households in the sample group, 65 of them had debt. The majority of indebted households were 33 farming families with an average household debt of 496,593 baht, followed by the families of daily wage laborers with a lower average debt of 106,883 baht per ousehold; 2) debt stemmed from four main causes: state policies, revenue exceeding expenses, lack of financial understanding, and easy availability of loans with low interest rates and high orrowing limits; and 3) the six strategies proposed for solving debt problems were debt consolidation, improving financial literacy, saving money, seeking additional income, avoiding further loans, and cutting principal costs. The researchers further identified five preliminary steps toward applying these strategies: exploring and recording the debt data, analyzing expenses and incomes in order to develop a debt management plan, negotiating with creditors; budgeting expenses and planning debt repayment. The findings suggested that the state policy of ฟgricultural loan did not help farmers to afford the production cost. Instead, the policy put them in a cycle of endless borrowing. In order to solve debt issues effectively, however, it is essential for households with debt to design their own specific solutions in line with their particular context and capacity. A key insight showed that the state should change the way it thinks from using the lending policies for solving farmer’s problems to developing their potential and capabilities they need for being self-reliant.