News and Media

Sharing and Validation Workshop of UNCDF's study on “Financing Agricultural MSMEs in Liberia”

  • January 03, 2022

  • Monrovia, Liberia

James Kabia

Communication Specialist

james.kabia@uncdf.org

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Through the project ”Livelihoods and Employment Creation project” implemented by United Nations Development Programme (UNDP) to improve livelihood and job creation in Liberia, United Nations Capital Development Fund (UNCDF) has concluded a study titled “Financing Agricultural MSMEs in Liberia” which finds that Agriculture could be a leading catalyst in creating tons of jobs and enhancing livelihoods in the country if farmers are supported with access to financial services.

This sector is performing way below its potentials currently and the main reason for this is because local farmers lack access to financial services,” Alfred Akibo-Betts, who led the study, noted.

The study did not just seek to identify the challenges that local Liberian farmers experience in accessing financial products and services, it also proffers recommendations on some of the best approaches or financing mechanisms by which farmers within the sector could be supported with financial services.

In a well-attended meeting to validate the findings and recommendations of the study held on 10th December 2021 at Monrovia, Liberia, the Minister of Agriculture, Mrs. Jeanine Cooper, shared that in addition to the challenges identified in the report, “growth in the sector had been limited by COVID.”
And so, I was happy when UNCDF contacted me to brief me about this project. This project is close to our interests, and we believe its focus is going to help bolster our efforts in developing the sector.”

Deputy Minister for Ministry of Finance and Development Planning, Mr. Augustus Flomo further emphasized the potential for Agriculture in Liberia. “We have everything we need to scale up Agriculture,” he stated linking the sector to SME growth. “This intervention for us organized by UNCDF and UNDP to work with players in the sector to improve access to finance for farmers is very welcoming.

The study finds that farmers in Liberia are largely excluded from the existing financial services sector because of the harsh conditionalities such as requirements for collaterals and high interest rates imposed by current lenders and commercial banks.

In addition to these challenges, the report states in its executive summary that “ at the macro level, other factors affecting the agriculture sector include the lack of extension services to support farming, limited off-takers like manufacturing companies and exports, which will boost production in farms, and the road network.”

By way of recommendations, the report identifies two approaches to financing Agricultural MSMEs. The approach targeting rural farmers would provide loans at concessionary rates and grants for farmers with scalability potential through cooperatives, credit unions and Village Savings and Loans Associations (VSLAs). MSMEs within the formal economy would also benefit from this scheme. However, MSMEs within formal business organizations can receive guaranteed loans at concessionary rates through commercial banks. Those MSMEs who show the most potential for scalability will benefit from grant funding. This framework is then consolidated through the provision of business development trainings, business coaching and mentorship which can be delivered together with partners who have capacity in that area.

Deputy Country Representative for UNDP Liberia, Violet Baffour, highlights the significance of these recommendations and why it must be supported to thrive.

I come from Ghana, and I have seen Agriculture grow the economy in Ghana. I have seen supermarket shelves go from “Made in USA” to “Made in Ghana” and I know it is possible here in Liberia. We need the technical capacity and environment, but we also need the strong base and overall commitment to address issues of corruption and other limitations within the country.”

Making public and private finance available to the people who need it most forms the DNA of the work we do with Local Transformative Finance. Therefore, we are very pleased to support the Liberian Agri-preneurs who have demonstrated so much potential but are limited because the existing financial services structure is not responsive to their specific needs”, Christel Alvergne, Regional Technical Adviser for Local Transformative Finance at UNCDF expressed.

We, as a UN family, commit our every effort and resources to this cause. But we also need the government to do its part by addressing corruption and other impediments to SME growth in the country,” Violet concludes.

Download the report via: https://www.uncdf.org/article/7381/financing-agricultural-msmes-in-liberia---livelihoods-and-employment-creation-project