Press release No.: IFAD/37/08

Rome, 26 August 2008 - A US$27 million loan to the Federal Republic of Nigeria from the International Fund for Agricultural Development (IFAD) will strengthen microfinance institutions and establish linkages between these and formal financial institutions in 12 Nigerian states.

The total cost of the Rural Finance Institution-building Programme (RUFIN) is US$40 million. IFAD is funding the programme with a loan of US$27 million and a US$400 000 grant. The programme is co-financed with the Ford Foundation and will run for seven years.

The agreement was signed today in Rome by His Royal Highness Crown Prince Eheneden Erediauwa, Nigeria’s Ambassador to Italy and IFAD Vice President Kanayo Nwanze.

The new IFAD-funded programme will lay the foundation for the long-term development of a sustainable rural financial system in Nigeria.

The RUFIN programme will help develop and transform target-group organizations into rural finance institutions that improve poor rural people’s access to low-cost credit. As such, it will allow marginalized groups such as women and young people to access financial services and invest in agriculture and small businesses.

The programme will develop new alternative financial products, which facilitate cash-flow and lending based on character reference rather than assets to overcome poor people’s obstacles to borrowing. It will also promote an improved legal, policy and regulatory framework.

The Ford Foundation will contribute to the programme with a grant worth US$500,000 to provide part of the guarantee fund under the microfinance development fund established by the Central Bank of Nigeria.

Since 1985, IFAD has made loans of US$187.5 million to the Federal Republic of Nigeria to finance nine rural development and poverty reduction programmes and projects valued at US$639.9 million overall.

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IFAD was created 30 years ago to tackle rural poverty, a key consequence of the droughts and famines of the early 1970s. Since 1978, IFAD has invested more than US$10 billion in low-interest loans and grants that have helped over 300 million very poor rural women and men increase their incomes and provide for their families. IFAD is an international financial institution and a specialized United Nations agency. It is a global partnership of OECD, OPEC and other developing countries. Today, IFAD supports more than 200 programmes and projects in 81 developing countries and one territory.