Pakistan: Pakistan Poverty Alleviation Fund (PPAF) pioneers crop, livestock insurance for farmers

ISLAMABAD: The Pakistan Poverty Alleviation Fund (PPAF) has launched the first-ever indexed and hybrid weather micro-insurance products to facilitate and compensate small farmers in Pakistan.

Presided over by Securities and Exchange Commission of Pakistan Commissioner Muhammad Asif Arif, a simple ceremony to this effect was arranged at a local hotel, which was attended by representatives of State Bank of Pakistan, the World Bank, International Fund for Agricultural Development (IFAD), KfW, German Development Bank, UKAID, Tameer Microfinance Bank, National Disaster Management Authority, Pakistan Microfinance Network, government bodies, insurance companies and others.

Addressing the occasion, Arif said that micro-insurance stands at a critical juncture in Pakistan. He commended PPAF on for introducing revolutionary indexed crop and livestock insurance products in Pakistan. As regulator, he said, SECP has remained committed to promoting micro insurance in the country through research, introducing pivotal regulations and promoting a healthy policy environment.

PPAF Board of Directors Member Zubyr Soomro said that the need for micro-insurance has been felt over the years and it is the tipping point to upscale it. He said that we would have to make the most of this opportunity. He said that sincere efforts are needed to make micro-insurance sustainable.

In his remarks, PPAF Chief Executive Qazi Azmat Isa said that micro-insurance initiative is the result of close collaboration between PPAF and IFAD. He lauded the role of insurance companies and SECP as a regulator to make micro-insurance a success. He said that farmers are badly affected by climate change, fluctuation in the prices of their produce and poor quality of agri inputs. He said that micro-insurance would prove to be a vital instrument in fight against poverty.

State Bank of Pakistan Agricultural Credit and Microfinance Department Senior Joint Director Kamran Bakshi said that by launching indexed and hybrid weather micro-insurance PPAF has provided a unique platform to market leaders to serve the poor, particularly the farmers. He said that the focus must be on protecting the borrowers.

PPAF’s Senior Group Head Ahmad Jamal said that PPAF is committed to grassroots development and micro-insurance would prove to be one of the instruments to alleviate poverty. He said that PPAF would capitalise on its outreach so that maximum people could benefit from micro-insurance.

PPAF’s Financial Services Group Head Yasir Ashfaq highlighted that these products will lead the new era for micro insurance in Pakistan. He said indexed insurance products are easy to administer, transparent, innovative and significantly reduce any chances of moral hazard or fraud. He said PPAF envisions scaling up these products at a national level, preparing detailed indices for various districts with the support of stakeholders including government agencies, donors, MFIs and insurance companies.

The weather-indexed crop and ‘live-weight’ livestock insurance products have been designed by PPAF, with support from IFAD through a strategic partnership with SECP.

These products have been prepared in collaboration with Meteorological Department, Livestock Research Institute and are based on needs of small and marginal income farmers. PPAF has launched these products as a pilot in collaboration with local insurance companies in districts Khushab and Chakwal.

The pilot projects have received overwhelming response and showcased significant potential in providing efficient and transparent form of risk mitigation for small and marginal income farmers and livestock owners across the country.

SOURCE: Daily Times Pakistan

Nigeria: Microfinance banks may receive N4.7tr ($30 billion) grant from nine investors

NIGERIAN microfinance banks may soon be recapitalised to the tune of $30 billion about (N4.7 trillion), as nine investors have announced their willingness to inject more fund into the sector.

The $30 billion fund that may come in the form of grants to the banks would be provided by Blue Orchard; Alietheia Capital, Bank of Agriculture (BOA); Patners for Development, Nigeria Capital Development fund, French Development Agency; Proparco; PlaNet Finance, and African Development Bank (AfDB).

The Representative of Blue Orchard Microfinance Investment Managers, Maxime Bouan who spoke to journalist at the on-going first Nigeria International Microfinance Investors Conference yesterday in Abuja, said his company alone was ready to invest $5 million in the sector.

He said, with a population of 160 million people, Nigeria MFB market was the most important sector given the number of people that needs funding.

According to him, the company has already approved $3 million, which would be disbursed to MFBs in a couple of months, adding that the company was planning to double its investment in the banks because of its ability to raise more funds.

The President National Association of Microfinance Bank (NAMB) Jethro Akun in his address disclosed that a Nigerian Microfinance Private Fund institution would be established to collect funds from foreign investors to invests in MFB, which will in turn grant credit facilities to the people.

He maintained that the conference was aimed at bringing foreign investors, who are already investing in MFBs into an organised system to ensure coordinated and organised service delivery in the sector.

Akum noted that the establishment of MFB private fund institution would help in stabilising the sector by alleviating the challenges of liquidity and available refinancing funds for MFB and MFI in the country.

The MFB private fund institution, he said, would also provide the rural dwellers easy access to soft loans, and fast track the attainment of food security.

The Country Representative, International Fund for Agricultural Development (IFAD), Ms. Atsuko Toda, believed that access to finance could play a crucial role in the agricultural transformation agenda, because farmers have always been looking for credit for the adoption of technologies.

She also emphasised the importance of finance, saying it was necessary to fuel the growth of value chains and creation of job opportunities for the unemployed youths, adding that access to micro finance was crucial for smallholder farmers.

By Joke Akanmu, The Guardian

Nigeria: Rural finance institute woos foreign microfinance investors

By Tina A. Hassan, Daily Trust

The Rural Finance Institute supported by the International Fund for Agricultural Development (IFAD) said it is organizing a two-day international microfinance conference which would serve as platform for attracting foreign investors.

The conference, scheduled to hold on 18-19th of this month, is expected to enable Nigeria through RUFIN, to access a pool of fund that would be made available to local microfinance banks that would in turn make them available to the rural poor at very negligible interest rates.

Nuhu Danjuma, a consultant with RUFIN said the aim of the conference is to attract foreign microfinance institutions to support local microfinance banks especially those working with RUFIN in rural communities to boost the economic status of the rural poor.

He explained that RUFIN is working on a number of microfinance institutions to support grassroots communities which are largely farmers, to have access to funds and empower them economically but the demand for such fund is beyond the capacity of the small banks.

“The conference will serve as a forum for bringing microfinance investors all over the world to invest in microfinance banks in Nigeria as well as showcase their goods and services.

One of the benefits of this conference is that it would increase access to rural finance and reduce lending rate to the rural poor,” he said.

President of the National Association of Microfinance Banks, Mr. Jethro Akum said funds pooled from the investors would be registered as private funds that would be accessed by microfinance institutions dealing with grass root people as well as Non Governmental Organizations (NGOs).

He said the fund is a partner’s development fund that would be called microfinance private fund.

Nigeria: RUFIN links 521 savings groups to MFBs – Coordinator

The Rural Finance Institution Building Programme (RUFIN) has linked about 521 savings and loans groups to Micro-Finance Banks (MFBs) in Benue, Mr Abayomi Seriki-Musa, its Zonal Coordinator, said on Thursday.

Seriki-Musa said this in Makurdi when the Supervision Mission led by Miss Atsuko Toda, the International Fund for Agricultural Development (IFAD) Country Programme Manager, monitoring RUFIN projects visited Makurdi.

RUFIN is a seven-year IFAD-assisted programme designed to improve the performance of non-bank rural finance institutions to enable them to develop to sustainable Rural Microfinance Institutions (RMFIs) in the programme participating states.

The goal of the Programme is to improve the income, food security and general living conditions of poor rural households, particularly women-headed households, youth and the physically challenged.

Seriki-Musa said that the zonal office, through the state coordinator, had developed a template for work plan and budget of the participating local governments in the zone.

According to him, the office also provides technical support to the savings and loans groups in the three participating local governments of Gboko, Otukpo and Logo.

He said that funding constituted a major challenge to the implementation of identified projects since the inception of the programme, noting that the state government had yet to pay its counterpart fund.

“Activities have been lined up for the local governments but funding has been affecting these activities; funding has been a challenge since the beginning of the project.”

In his remarks, Mr Ben Odoemena, the IFAD Country Programme Officer, said that the meeting was more of an implementation support mission.

He said IFAD was concerned about how the MFBs put to use the funds being given to them by RUFIN.

Odoemena also advised RUFIN to focus on mentoring MFBs that had not come on board the programme.

However, the leader of the supervision team, observed that the programme had made a lot of progress in the state.

SOURCE: Business Day Online

IFAD says over $700m of loans, grants portfolio goes into rural financial services

Almost 17% of grants and loans from the International Fund for Agricultural Development (IFAD) are used to support rural financial services, the UN agency said today May 21, 2012.

This makes the IFAD one of the top ten funders of microfinance worldwide, it said after announcing that it has joined forces with the EMRC to host this year’s Africa Finance & Investment Forum (AFIF) from June 17-19, 2012 in the Netherlands. The EMRC is an international non-profit organisation that promotes African sustainable development through the growing of business partnerships.

The agency works with partners in rural finance, including grass-roots savings and credit associations, financial cooperatives, microfinance institutions, rural banks, specialized NGOs and agricultural development banks.

“Approximately 17 per cent (more than $700 million) of IFAD’s portfolio of loans and grants is focused on rural financial services, making IFAD one of the top ten funders of microfinance worldwide,” said an IFAD Senior Rural Finance Adviser, Michael Hamp.

Our Rural Finance Policy spells out the guiding principles of IFAD’s rural finance operations,” adds Hamp.

In a statement copied to ghanabusinessnews.com, the IFAD said it will spotlight the importance of financial tools for populations across sub-Saharan Africa to ensure rural development and financial growth during the Forum which is organized by the EMRC.

“There is no single microfinance model – that is what IFAD’s presentation at AFIF will focus on,” Michael Hamp explained.

Themed “Financial inclusion through SMEs & Cooperatives”, the event will present the latest global topics and issues to face African finance, according to the organizers.

This year’s AFIF Forum will gather leading global representatives from a variety of sectors to highlight the financial tools, solutions and growing policy trends to ensure Africa’s economic growth for Africa’s Small and Medium Enterprise sector (SMEs). The discussions and proposals to be highlighted at the forum are essential for a cross section of African sectors to establish their full economic potential.

By Ekow Quandzie, Ghana Business News

Nigeria: Nigeria is Africa’s largest microfinance market

From Business Day Online

Nuhu Danjuma, a finance consultant, says Nigeria is the largest microfinance market in Africa, but that the sector has never benefited from cheap capital. Danjuma, who spoke in Abuja on Thursday, said that high interest rate charged on loans by the microfinance banks was because they did not have adequate operating capital.

His consulting firm works for the state-run Rural Finance Institution Building Programme (RUFIN).

“Currently Nigeria is the biggest microfinance market in Africa; there has been little or no access to external capital, which is cheap and also gives the operators enough window to trade with,” he said. “If you look at the history of microfinance banks in Nigeria, this sector is one of the few sectors that has never benefited from any cheap capital. “In other countries you find out that the government sets aside funds for on-lending.

“The reason why there are high interest rates in the microfinance sector locally is that the cost of capital has been very high because first they don’t have enough capital.

“And second the little they get from local commercial banks is very high, therefore they also need to lend at a high rate.’’

Danjuma said the firm was organising the first Nigeria International Microfinance Investment Forum in partnership with Microfinance Association of the United Kingdom on the platform of the International Fund for Agricultural Development (IFAD) and RUFIN. The consultant explained that the forum would hold in July and would bring international investors to Nigeria. The investors, he added, would finance projects and give funds and grants to microfinance banks.

“This platform is to actually bring what we call microfinance investment vehicles to the country; these are funding agencies globally that are interested in microfinance banks,’’ he said.

He said the investors would partner with IFAD and other 400 microfinance institutions.

He added that 10 international microfinance funding agencies, five local funding agencies and operators from Gambia, Cameroun and India had showed interest in the forum.

RUFIN is an IFAD project aimed at reaching out to rural agricultural producers and NGOs through microfinance banks. Danjuma said the project had 43 financial institutions and 33 microfinance banks that were working with cooperatives in the field of agriculture to facilitate savings, increasing and boosting agricultural production in the rural areas.

He observed, however, that the 43 microfinance institutions were under-capitalised.

“We realised that these 43 microfinance institutions working under the IFAD-RUFIN projects are under-capitalized.

“They over-sensitised the market at the grass roots so they do not have enough funding to lend to these people.’’

Rural Institutions, Tools for Social and Economic Progress

From International Fund for Agricultural Development

Rome — Strong rural organizations like producer groups and cooperatives are crucial to hunger and poverty reduction. They allow small producers to play a greater role in meeting growing food demand on local, national and international markets, while improving their own economic, social and political opportunities.

This thinking connects a series of case studies found in a new publication by the Food and Agriculture Organization of the United Nations (FAO) and the International Fund for Agricultural Development (IFAD).

The publication, Good practices in building innovative rural institutions to increase food security, released during the International Year of Cooperatives, presents thirty-five cases of successful institutional innovations that have empowered small-scale producers, and contributed to food security in different regions in the world.

“In order to be fully productive, small farmers, fisher folk, livestock keepers and forest users in developing countries are in dire need of services that are lacking in rural areas,” say FAO Director-General José Graziano da Silva and IFAD President Kanayo F. Nwanze in the publication’s foreword.

“There is a need to recognize the critical role of these innovative organizations and institutional arrangements in order to be more effective in poverty reduction and food security efforts,” they continue.

The case studies describe some of the services and resources that these institutional arrangements and new models of public-private engagement can offer to small-scale producers. They include accessing and managing natural resources; providing inputs like seeds and equipment; enabling access to markets; improving information and communication, and helping small producers to have a voice in decision-making processes.

• Farmer Field Schools developed by FAO in Asia, and subsequently in Africa, have enabled millions of small farmers to analyze their production systems; identify their risks and opportunities and test solutions, and adopt new practices that lead to improvements in their livelihoods and food security.
• West African and Indian farmer groups have helped members to obtain short-term credit through a “warehouse receipt system”. In collaboration with micro-finance institutions, they have provided storage facilities for agricultural products. The receipts are then used as guarantees to obtain short-term credit.
• In India, where a disastrous harvest can lead poor people to mortgage their lands, a women’s association has provided loans to release mortgaged land and free borrowers from dealing with money lenders.
• In Cameroon, farmers’ groups, collectors, buyers, resellers and researchers collaborated to select a new plantain variety that fetches a higher price than traditional plaintains. The new variety is also used to make specialty dishes and chips. This has led to the emergence of small groups, including dozens of women’s groups, concerned not only with the production and sale of bunches, but also with processing the plantain into chips.
• In the Gambia, the National Fisheries Post Harvest Operator Platform is a mechanism for dialogue where governments can learn about small producers’ needs while producers express their concerns and preferences.
• In Honduras, greater control over natural resources was transferred to local communities as part of the decentralization process, resulting in better land management and cropping practices. These Community Development Councils, representing rural families, participated in the Municipal Council and managed to ban slash-and-burn agriculture.

Some of the case studies also demonstrate the importance of including youth in small producer organizations and in decision-making processes.

“While highlighting the success factors for small producer organizations to thrive, these good practices can allow development practitioners and other stakeholders to learn from successful initiatives in various countries, to support them and replicate them. We hope that policy-makers and development practitioners in developing countries will build on insights from this set of case studies to promote innovative types of partnerships involving relevant stakeholders for effective food security strategies and rural development,” write Graziano da Silva and Nwanze.

Support for women

Women in developing countries are among those who have benefited from rural organizations and other innovative institutions.

Women make up, on average, 43 percent of the agricultural labour force in developing countries, but tend to have lower-paid, less secure forms of employment and less access than men to agricultural resources like land, livestock, farm labour, education, extension services, credit, fertilizers and mechanical equipment.

The Goodpractices publication shows how rural organizations, including cooperatives, can help women farmers to overcome the social, economic and environmental constraints they face, by providing services such as access to markets, information, extension, and natural resources:

• In India, members of a women’s association increased their vegetable production through better management of natural resources. The women have used watershed development techniques, such as building stone bunds, or ridges, and vegetative barriers, to control soil erosion, and reclaimed 3 000 hectares of ravine lands in 73 villages.
• In Burkina Faso, a microfinance network has provided short-term credit to women in order to support their development of parboiled rice, which tends to be more marketable due to its improved flavour and nutritional values.
• A water-use association in Ghana helps women to gain access to land for vegetable production by collecting a fee for annual membership that entitles each woman to a vegetable plot.

Producer organizations combined with links to non-governmental organizations (NGOs), the research community, and public and private actors also help small-scale producers, both men and women, to voice their concerns and interests in order to influence policy-making processes.

Nigeria: Banks, NGOs disburse N59.3 million ($360k) to rural poor

From The Moment

MICROFINANCE banks and Non-Governmental Organisations participating in the FG/IFAD-sponsored rural finance institution building programme (RUFIN) have disbursed over N59.3 million to beneficiaries of the programme since 2006.

RUFIN is one of the three ongoing intervention programmes being sponsored by the Federal Government and IFAD to improve the wellbeing of rural farmers in the country.

The programme is being implemented in 12 states in the south.

RUFIN’s southeast zonal coordinator, Mr. Nze Okorie in an interview with newsmen, said the funds were disbursed to 1,353 groups out of the participating 1,393 groups by14 micro finance banks and three NGOs participating in the programme.

The zonal coordinator added that the banks were striving to mop up funds for disbursement to other beneficiaries on the waiting list.

‘The loan recovery rate is very impressive; the banks have worked out a strategy to recover outstanding loans from defaulters.

‘I am happy to add that the beneficiaries have migrated from petty trading to more profitable ventures and have achieved financial independence,’ he said.

Okorie said that the banks were willing to lend to the beneficiaries because the rate of loan recovery from the benefitting groups was encouraging as there were no defaulters.

He urged the government to always channel funds meant for financing rural businesses through micro finance banks as the implementation of RUFIN in rural areas had recorded many success stories.

He listed concentration of MFBs in the rural areas and free counselling on funds utilisation, as some of the success stories.

‘Beneficiaries now enjoy free counselling on funds utilisation and savings accounts.

‘Majority of the micro-finance banks have extended credit facilities to various beneficiaries and have also strengthened their base and methods of lending to ensure ready funds at all time,’ Okorie said.

The coordinator listed poor logistics at local government councils as the major challenge facing RUFIN officials in rural areas.

He said that the problem inhibits easy monitoring of the beneficiaries and participating banks.

Nigeria: FG Provides N1bn Finance for Rural Farmers

By Yemi Akinsuyi, This Day Live

In a renewed commitment to fast-track access to finance in rural part of the country, the Bank of Agriculture has injected N1 billion for on-lending to Micro Finance Banks (MFBs) in remote areas.

The National Project Coordinator for Rural Finance Institution building Programme (RUFIN), Alhaji Musibau Azeez, disclosed this in Abuja while presenting a communiqué issued at the end of a Financial Linkage forum organised by International Fund for Agricultural Development (IFAD) and RUFIN.

To facilitate access of the Micro Finance institutions to the N1 billion, Azeez disclosed that a committee has been set up on access to the fund, calling on the development banks to increase it.

He disclosed that the target of the IFAD RUFFIN project was to attain a sustainable rural financial system in 12 states of the federation, in which 36 Local Government Areas were selected, hinting that 33 rural MFBs had already benefited.

He stressed that the importance of the stakeholders meeting was to link commercial and development banks with selected Microfinance Institutions for refinancing their micro lending and also to increase access to finance in the rural areas by encouraging financial deepening.

The statement however stressed the need to facilitate the establishment of contact and involvement of RUFIN Microfinance banks to access the N450 billion Nigerian Incentive- Based risk Sharing System for Agricultural Lending (NISAL) that is being promoted by the Central Bank and AGRA.
They further harped on the need to get affirmative action from the LGA chairmen to provide some level of funding to the MFBs.

Noting the contribution of the Bank of Agriculture and Bank of Industry in the funding of some MFBs, the forum advised RUFIN to follow-up the One billion naira set aside or on lending, so that the MFBs can access the fund as soon as possible.

They enjoined the CBN to issue detailed guidelines on down scaling and financial linkage to assist and encourage Development Micro Finance Banks to actively pursue the programme of linkage and wholesale funding support to the financial institutions.

The statement further recommended that credit facilities to farmers and rural populace should be channelled through Micro Finance institutions across the country, appealing to that fund providers for Micro lending purposes to recognise the unique cash flow cycles for various farm products when structuring repayment cycles for agriculture lending.

They urged the RUFIN project to do a follow up the issue of interest rates between commercial Banks and MFBs on one hand, and the MFBS and Village savings Groups, Micro Finance Institutions and farmers groups on the other hand.

RUFIN Technical Adviser, Prof. Adeniyi Osuntogun, however urged micro finance institutions to make savings and deposit mobilisation important aspects of their activities, adding that increase access to finance through micro lending should be deepened.

Nigeria: Microfinance banks as mechanism to transform rural communities

From 234Next.com

Olusegun Ogidan, a micro finance specialist, has called on the federal government to consider using Micro Finance Banks (MFBs) as the mechanism to transform rural communities under its poverty alleviation programme.

Dr Ogidan made the call in a presentation at the ongoing 2011 Financial Linkage Forum in Abuja, organised by the Rural Finance Institution Building Programme (RUFIN), an IFAD-assisted programme.

He said that the success recorded with microfinance banks on fund disbursement to rural farmers in the 12 RUFIN states, showed that MFBs were the most credible channels for the rural poor to access funds.

The seven-year programme is being implemented in 36 local government areas across 12 states of Oyo, Lagos, Anambra, Imo, Nasarawa, Benue, Zamfara, Katsina, Adamawa,

Bauchi, Akwa Ibom and Edo.

RUFIN is being implemented with $27.2-million secured by the federal government from the International Fund for Agricultural Development (IFAD) and was designed as a poverty alleviation programme with focus mainly on women, youths and physically challenged people.

Ogidan said that RUFIN had proved that it was possible to establish microfinance linkage between the rural micro finance institutions, microfinance banks and deposit money banks.

According to him, the linkage has created a platform for the banks to mobilise enough funds to lend to the rural people and make life more meaningful to them.

Ogidan also noted that the lack of access to finance had been a major challenge against the development of rural enterprises in Nigeria.

He suggested that the three tiers of government should consider channelling agricultural and other funds on poverty alleviation through MFBs.

He said the MFBs already had a model which included a transparent monitoring instrument and liaison with cooperative societies that could be adapted to further negotiations on channelling of funds.

The choice of MFBs had become imperative because they were designed mainly to serve the purpose of the rural populace and in the process, had direct dealings with the rural populace, Ogidan said.

Also, Akin Akintola, the executive director, Community Development Foundation, said that in spite of the challenges associated with the microfinance strategy, it remained one of the most effective ways of reaching the large underserved rural population in Nigeria.

Mr Akintola noted that MFBs promote best practice in rural finance and strengthen local and grassroots financial institutions.

Ubokutom Nyah, managing director, Prudential Cooperative MFB, Ikpe Annang, Akwa Ibom State, said that to achieve the desired results in the areas of poverty eradication and rural development, funds must be made available to the rural poor.

Babale-Umaru Gire, the chairman, Standard Micro Finance, Yola, described RUFIN as one of the best programmes towards poverty eradication and the best way to connect the rural poor. He said that since the commencement of the programme, his bank had disbursed more than ₦12 million to 30 participating cooperative societies in the area.

Mr Gire said that RUFIN was achieving its objective of assisting the government to improve the standard of living and eradicating poverty mostly in the rural areas.

Mrs Olufunke Adeyoyin, an assistant general manager, Trust Fund MFB, Benin, noted that RUFIN had since inception been able to mobilise a lot of deposits in Orhionwon local government area.

“This local government had been abandoned in the rural development activities but since the inception of RUFIN, we have been able to carry them along and they have benefitted over ₦8 million from the bank disbursements,” Adedoyin said.

She also urged the government to consider expanding the programme to other parts of the country.

According to Chukwu Chike-Ettie, the director, Okigwe MFB, the bank had disbursed over ₦20 million to more than 100 beneficiaries facilitated by RUFIN.

He said that if more MFBs were brought on board, opportunities would be created for many more beneficiaries, thereby reducing the poverty level.

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