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Saturday, September 30, 2023
Noel Kokou Tadegnon
LOME, Togo, Sep 4 2002 (IPS) - Considered risky and unprofitable, Africa’s farming community has often been denied access to credit and insurance. But now some financial institutions are offering new hopes to farmers in West Africa.
Without loans, farmers cannot purchase new machinery or fertiliser. As a result, their yields often suffer and their dreams to modernise and expand their operations often fail.
Jean Tsevi, a farmer from Agou Tomegbe, 155 kilometres northeast of the capital Lome, says “I did everything I could to get a loan to buy fertiliser, but the banks refused”.
“The banks demand collateral and identity papers,” says Dovene Amouzou, a farmer from Kpele Dafo, a town 160 kilometres northeast of Lome.
She says women often suffer more when seeking a bank loan. “Most women don’t even have a birth certificate (a prerequisite) to get an identity card,” she says.
“One of my female neighbours, who has no identity papers, was thrown out of a co-operative society which offers loans to farmers,” claims Amouzou.
Traditional banking and financial institutions occasionally offer loans and when they do, they demand more than just the farmer’s property as security.
Small farmers are the most affected, as they often do not have a house or a piece of land to put up as collateral.
“Any farmer can get credit if he puts up the security,” says a banker in Cotonou, Benin, who requested anonymity. According to him, “small farmers are always broke because they spend their money on family problems, and on assets just to acquire status in society”.
In Benin, the National Society to Promote Agriculture — a state-run body — gets 40 billion CFA (around 61 million U.S. dollars) worth of credit from commercial banks each year. This helps small farmers purchase inputs for growing cash crop.
Some 100 participants at last month’s workshop, organised by the Lome-based African Rural and Agricultural Credit Association in Lome, suggested strategies to support the agricultural sector, which is receiving less investment in spite of its potential for diversified growth.
Gedeon Muriuki, president of the association, said he hoped the workshop — titled ‘The Role of Commercial Banks in Rural Areas’ — would be a “crucial step in solving the problems between commercial banks and small lending institutions in order to meet the farmers’ borrowing needs”.
His colleague, Rasmane Ouedraogo, who is the secretary general of the association, said in spite of the manpower involved in farming and their contribution to the region’s Gross Domestic Product (GDP), farmers still receive little attention from lending institutions.
‘’Agriculture plays a dominant role: accounting for between 30 and 35 percent of the region’s GDP; employing 65 to 85 of the region’s workforce; as well as for 60 to 80 percent of its export revenues,” Ouedraogo explains.
Participants at the Lome workshop came from Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. The eight countries are members of both the West African Economic and Monetary Union, and of the West African Development Bank.
The participants urged banks to expand their services to the rural areas.
‘’If commercial banks want to effectively evaluate agricultural programmes and financing requirements, they must improve their ability to do so,” says Pierre Claver Damiba, former president of the West African Development Bank.
“We’ve found that sometimes resources and credit to finance agriculture, especially for the production of food, can be quite expensive; perhaps we should find ways to lower the interest rates,” Damiba adds.
Participants bemoaned the lack of basic infrastructure in rural areas, such as roads, telecommunications, energy and water, which they say discourage banks from establishing branches there.
“We discussed the role the state should play, and we think that it can have important functions on various levels. On the one hand, it can help develop strategies, and on the other, it should act as a watchdog for the rural people,” Damiba explains.
“Financing for rural enterprises has remained marginal,” says Togolese Prime Minister Koffi Sama, who regrets that banks only finance trade, at the expense of agriculture.
“We can no longer continue to make development plans for our continent if a large proportion of our people is excluded from current financing schemes,” says Ouedraogo. Fighting poverty, he says, requires the participation of all of the continent’s financial institutions.
“Developing our economies in a sustainable way is impossible if the financing for rural enterprise is systematically marginalised,” adds Yayi.
The African Rural and Agricultural Credit Association will hold its meeting in Abuja, Nigeria in November. The body is an association of banks and financial institutions – directly or indirectly – involved in rural development.
Established in 1977, the body seeks to improve the rural financial environment in Africa through promoting appropriate policy frameworks and assisting its members to increase their presence in rural areas.
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