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IFAD
in the Republic of Macedonia
The first initiative funded by IFAD was the Southern and Eastern Regions Rural Rehabilitation Project, now completed. It established a revolving credit fund, which was the first credit facility in the country to be specifically directed at rural development. The project showed that there was a strong demand for agricultural credit, that lack of financial services is a major constraint to private agriculture, and that group lending is an effective way to give poor rural people access to financial services. The second and ongoing IFAD-funded initiative is the Agricultural Financial Services Project (AFSP). The overall goal of the AFSP is to raise the standards of living of the rural population in Macedonia through increased and sustainable economic activity that is responsive to the emerging market context. The main part of the IFAD loan was allocated to finance capitalization of the Agricultural Credit Discount Fund (ACDF), a refinancing facility that is the core operational component of the project. The ACDF provides capital to Macedonian financial institutions to finance loans for investment and working capital. Loans to smallholders finance improvements in agricultural and livestock production, and loans to associated small enterprises support their rural processing, packaging, marketing and trading activities. The ACDF is a highly successful feature of the ongoing project, which enables poor people to reap the full benefits of investments in agriculture. IFAD’s strategy IFAD’s overall objective is to reduce rural poverty by helping poor rural people increase their incomes and living conditions in a sustainable manner. As a way to achieve that objective, the IFAD Rural Finance Policy Paper emphasizes the importance of responding effectively to poor rural people’s need for credit, taking into account:
The organization’s strategy focuses on increasing agricultural productivity, improving product quality and creating employment. Strategic actions include:
IFAD strengthens the capacity of rural financial and microfinance institutions to mobilize savings, cover costs, receive repayment of loans and make a profit, with the aim of increasing their outreach to savers and borrowers and achieving dynamic growth. The principal objectives of the ongoing Agricultural Financial Services Project are:
To achieve the first objective, the Agricultural Credit Discount Fund (ACDF) was established to expand commercially viable and affordable sources of rural credit and to shift credit risk to commercial banks. To help meet the second objective, further measures provide support throughout the cycle of agricultural production, processing and marketing, primarily to borrowers from the financial institutions that are eligible to benefit from the ACDF. The Agricultural Investment Centre (AIC) facilitates access to financial and technical services among primary producers and small-scale processors/traders who are potential or actual borrowers from financial institutions participating in the project and whose loans are eligible for refinancing under ACDF rules. The service provides a basis for minimizing production and marketing risks and contributes to enhanced profitability and incomes. The AIC has evolved and has now established private consultancy services that put IFAD’s investment in a sustainable framework. Source: IFAD |
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