Project ID: 1340
Executive Board document: EB-2005-86-R-28-Rev-1

Rural Business Development Programme

The programme. The goal and objective of the Rural Business Development Programme are to: (i) produce sustainable income growth for poor people in rural areas and small towns in the Republic of Moldova; and (ii) stimulate growth of farming and rural business activities in which the country has a comparative advantage. The principal programme outputs comprise: (i) an effective network of rural enterprise business service providers; (ii) the introduction of appropriate short- medium- and long-term financing, as well as new financial products to be made available to rural communities; and (iii) the provision of commercial infrastructure in rural areas. The programme’s orientation is consistent with IFAD’s strategic framework, its regional strategy for Central and Eastern Europe and the Newly Independent States, its strategy for private sector development and partnership, and the current country strategic opportunities paper (COSOP).

Who are the beneficiaries? The target group will include unemployed rural men and women, small and medium-sized farmers, rural entrepreneurs, agro-processors, input suppliers, traders and community groups. The approach establishes a series of investment products and mechanisms, primarily through the formal financial sector that would be accessed by the rural population throughout the country. The programme will specifically enable small enterprises to access financial services by making available a wide spectrum of business support and development services. Rural poor households will thus have the opportunity to improve their livelihoods through borrowing, taking advantage of the new employment generated through the creation and/or expansion of rural enterprises supported by the programme.

Why are they poor? Poor economic performance in the Republic of Moldova since independence (output now stands at 40% of pre-independence levels), and the associated collapse of the production and marketing support systems, has led to an increase in poverty and a worsening of social welfare. Per capita income is currently estimated at USD 710, making the Republic of Moldova the poorest country in Europe. The persistence and severity of poverty, despite increasingly robust economic growth over the past several years, is the result of continuing low incomes, high unemployment, and growing inequality following the collapse of the former Soviet Union and the shock of the Russian financial crisis.

Loan amount: SDR 9.1 million (equivalent to approximately USD 13.02 million)

Total programme cost: USD 20.31 million

Project ID: 1265
Executive Board document: EB-2003-80-R-31-Rev-1

Agricultural Revitalisation Project

The project's overall goal is to contribute to sustainable poverty reduction in rural areas of the Republic of Moldova, and to improve rural livelihoods through higher qualitative and quantitative levels of agricultural production, increased incomes, and a transparent, replicable governance process. - create productive employment and improve rural assets through a farmer-entrepreneur partnership, which will lead to the: (i) conversion of approximately 10 000 hectares of land in about 57 villages to intensive cultivation of high-value crops; and (ii) establishment of linkages between farming, and agro-services, agro-processing and market channels, and creation of off-farm income-generating opportunities. - create a replicable revitalization process, by: (i) establishing a proven process for community-based planning and implementation of development interventions; and (ii) developing, with government support, an approach for the revitalization of rural communities that focuses on operationalizing backward and forward market linkages.

Loan Amount:

SDR 10.30 million (approximately USD 14.9 million) on highly concessional terms

Total project cost: estimated at USD 18.2 million, of which beneficiaries will provide about USD 275 000 and national Government USD 3.0 million.

Cooperating Institution:

UNOPS

Project ID: 1110
Executive Board Document: EB-99-68-R-28-Rev-1

Rural Finance and Small Enterprise Development Project

The overall goal of this five-year IFAD-initiated project, the first IFAD intervention in the country, is to contribute to poverty alleviation and the improvement of household food security in rural areas during the transition to a well-structured free-market economy. To help achieve this goal, initial project objectives are to:

- facilitate the participation of the rural poor in the commercialization of agricultural and rural development; and

- contribute to the establishment of a responsive institutional framework for rural services delivery.

The project's initial post-privatization support builds upon the substantial foundation laid by support from other donors and is consistent with and supportive of a cohesive microfinance strategy for the country. Overall investment is geared towards helping build up economic and commercial activity among private landholders in the rural areas targeted for intervention. Private farmers, most of whom organize production on an extended family or small-group basis, constitute the backbone of agricultural production and will form the new economic base of the Republic of Moldova's 1 600 villages. The potential target beneficiaries comprise an estimated 41 500 private, poor farm households (including 1 500 small and family entrepreneurs).

Innovative Features:

The project will help establish financial systems and institutions that can, in turn, stimulate priv ate-sector initiative in the agricultural sector; this sector, in particular, is struggling to adjust to a changed economic and political environment. The proposed interventions respond to the priority given to promoting commercialization in agricultural and rural development in the Republic of Moldova. The project seeks to:

- develop a synergy among funding sources through the combined use of grant aid, IFAD loan funds and beneficiary contributions in support of small-scale commercial enterprises financed under the proposed small-scale enterprise development fund (SEDF);

- support the establishment of a deposit insurance scheme to promote savings mobilization by the savings and credit associations (SCAs) in rural areas and to assist them in becoming sustainable rural financial institutions;

- perform a brokerage role at the local level, on behalf of project area clients, to link them with relevant rural services, while simultaneously enhancing access (through the SCA and SEDF credit lines) to the means to invest; and

- contract specialized technical services on behalf of village-based, self-help organizations and the enterprises that receive SEDF support.

Loan Amount:

SDR 5.8 million (approximately USD 8.0 million) on highly concessional terms.

Total Project Costs:

Estimated at USD 15.1 million, of which USD 5.6 million will be provided by the Citizens Network for Foreign Affairs from USAID, USD 540 000 by the Government and USD 970 000 by the beneficiaries.

Cooperating Institution:

UNOPS.