Liberia: Government, Afriland Bank Sign US$700K Agreement to Fund Rice
Monrovia – Minister of Finance and Development Planning, Samuel D. Tweah and Agriculture Minister Jeanine Cooper have signed a “Cash Collateral Guarantee” agreement with Afriland Bank aimed at providing a financial remedy to the country’s rice production sector.
Report by Gerald C. Koinyeneh, [email protected]
Under the agreement, MFDP will provide an initial amount of US$700,000 to the Afriland Bank as cash collateral for utilization by various rice processors to purchase paddy rice.
The cash collateral will facilitate a revolving credit facility for rice processors at a lower interest rate and will increase production and distribution of home-grown rice by purchasing and processing seed rice from farmers and cooperatives in the country, MFDP said.
Speaking at the signing ceremony on Thursday, 26 March, Minister Tweah noted that the agreement was the first public-private engagement with the agriculture sector and it will set the basis for more direct fiscal interventions.
He noted that “trust” was the “catchy phrase of this new arrangement” urging beneficiaries to “never lose sight in their commitment to repaying.”
For her part, the Agriculture Minister stressed that providing financial access to farmers to increase food production is one of the newest hallmarks of the government under the PAPD.
This tripartite initiative by both ministries and commercial banks will help in opening agro-financing windows for productive farmers in the country, Minister Cooper said.
At the same time, the acting Chief Executive Officer of Afriland First Bank Liberia, Leopold B. Mbumen, thanked the Government for the preferring the bank as a partner in fostering the Pro-Poor Agenda for Prosperity and Development (PAPD).
He added that the component of the countries development agenda is particularly tied with his bank’s strategic goals, which makes it easy to execute.
Speaking further, Mr. Mbumen warned potential beneficiaries to consider the project as one that could make or break similar efforts by the Government in the future; stressing the need to ensure the project succeeds.
He added that Afriland will ensure that the funds reached targeted beneficiaries, work with the Government to monitor and ensure that beneficiaries utilize the fund in accordance with the project’s objectives.
Research shows that commercial banks’ lending to the agriculture sector in South Saharan Africa including Liberia is less than four percent.
With limited or no access to finance, farmers in the region struggle to increase their yields, especially in rice production.
The intervention by the government of Liberia is expected to create a paradigm shift in local rice production in the coming years, officials said.
The Government’s decision comes against the backdrop of poor access to credit in the agriculture sector as was articulated by rice farmers and processors during a recent business climate meeting in Ganta, Nimba County.
This agreement is the initial step to improving the agriculture sector and evinces the governments’ commitment to prioritizing and ensuring national food security by promoting the growing, processing, and distribution of home-grown rice as manifested in the PAPD.
“This initiative also marks the beginning of the implementation of President Weah’s vision of ensuring a vibrant agricultural sector by transitioning Liberian farmers from subsistence to commercial farming,” Minister Tweah said.
For accountability and transparent purposes, which would ensure repayment of the loans, the Ministry of Finance is expected to centralize all rice payments under the national budget and will ensure timely payments to rice processors through their designated accounts at the Afriland Bank.
Also, a team comprising the MFDP, Agriculture Ministry and Afriland Bank will effectively monitor and supervise the implementation exercise.
The government says the project is expected to help “rebalance and rebrand” the economy amid threat the COVID-19 outbreak, which is expected to ghastly impact the global economy.
A release from the MFDP noted that growth in this PAPD-value addition project to include other locally produced commodities will require the injection of additional capital for which the government will be seeking support from friendly governments, the donor community, and international organizations.
The release furthered that the government of Liberia’s intervention could mark a turning point in the agriculture sector, adding that not only will the production and consumption of home-grown commodities address goals one and two of the SDGs by putting money in the hands of local farmers, but it will also minimize capital outflow by reducing importation, strengthen the foreign exchange market and lower the commodity price index.