Financial institutions lack agri-businesses specifics - IFAD
MBABANE – The International Fund for Agricultural Development (IFAD) says financial institutions lack awareness of the specifics of agri-businesses.
IFAD cited the sugar industry as being an exception.
This is detailed in their 6mallholder Agricultural 3roductivity (nhancement and Marketing 3roMect Design 5eport, 2024, as part of the lessons learned since funding proMects in (swatini.
IFAD is an international financial institution and a specialised agency of the 8nited Nations 8N) dedicated to eradicating poverty and hunger in rural areas of developing countries.
According to the report, IFAD has a long-standing partnership with the *overnment of (swatini in driving rural development and provides a track record of impactful investments in agriculture for improving the lives of rural people, including the most vulnerable groups.
The report stated that the Independent Office of (valuation of IFAD IO() prepared proMect evaluations and reviewed mission reports of IFAD-funded proMects in the country in the 2000-20 periods.
Productivity
IFAD reported that the IO( provided valuable lessons for the formulation of the 6mallholder Agriculture 3roductivity (nhancement and Marketing 3roMect 6A3(M3) to be implemented over eight years, starting this year.
The report presented eight lessons, which include, access to financial services, simplicity of design and implementation arrangements, commercialisation of smallholder farmers¶ production, mechanisms to support market linkages, post-harvest production losses, targeting of youth, focus on &limate 5esilience, monitoring and evaluation M and () and procurement systems.
On access to financial services, the report explained that financial institutions lacked awareness of the specifics of agri-businesses the sugar industry being an exception), which they perceived as risky.
The report stated that leveraging the experience and expertise of Financial Inclusion and &luster Development FIN&/8D(), 6A3(M3 would develop a financial Instrument for risk management and agriculture index insurance to de-risk lending to smallholder farming and related value chain activities.
Adding, the report mentioned that simplicity of design and implementation arrangements have tended to be highly complex and ambitious; this, together with complex implementation arrangements, had affected efficiency and effectiveness
8nder commercialisation of smallholder farmers¶ production, it was stated that experiences from 6M/3 and FIN&/8D( show that organising farmers into clusters that are well supported increases the chances of better returns but reTuires time to build their business orientation.
Highlighted
The report highlighted that it was essential that before accessing production assets infrastructure support and markets, farmers were adeTuately capacitated.
³Mechanisms to support market linkages,- A two-way flow of information between buyers and producers must ensure that a) products and services meet market demands in terms of Tuality and Tuantity, and b) trust is fostered to sustain mutually beneficial long-term commercial relationships. 3rivate-sector oriented programming must have market intelligence of the need, motivations, adeTuate capacity of private sector partners and target beneficiaries, and should include implementation mechanisms,´ reads the report in part.
The report went on to explain that post-harvest production losses amounted to 40 per cent.
It was reported that a focus on improving production and productivity was not sufficient to improve incomes and food security.