Farmers seeking rural financial advice

The learning exchange event by IFAD and ICARDA was an important opportunity to exchange experiences, knowledge and views among the staff of IFAD’s Near East and North Africa Division (NEN), ICARDA researchers, and beneficiaries to discuss the nature of rainfed production systems and opportunities that face smallholders in these less-favoured areas in the region.

Fathia Bahran summarizes the field visit to the Integrated Research and Durum Economics Network (IRDEN) Jebal al-Hoss project and lessons learned from the project’s microcredit experience.

Visit to the Jebal al-Hoss project

The field visit to the Jebal al-Hoss project offered some exposure to project interventions, the project’s impact on the lives of the target groups, achievements and lessons learned.

The Jebal al-Hoss area is considered one of the poorest regions in Syria, with a population of about 250,000 distributed over 156 villages and hamlets; their livelihood is entirely reliant on agriculture and cattle herding. The significant decline in the rainfall rate in the project area has caused massive damage and loss and, as a result, about 58 per cent of the population lives below the poverty line. This is one of ICARDA’s research projects that brought together all stakeholders who were involved in producing durum wheat in less-favoured areas (e.g. farmers, researchers, extension organizations, seed producers and sellers, local technicians, and employees of other local public and private organizations) to work through a participatory, community-based approach.

During the visit, there were discussions among the participants, the beneficiaries and project staff about the main interventions and achievements of the project. The discussion covered two issues: increasing productivity and creating opportunities for improving income for smallholders by introducing improved varieties of durum wheat and using associated new production technologies (e.g. tillage, sowing methods, seed source and rate, date of planting, fertilizers and weed control).

The meeting group focused on the extent to which the project succeeded in promoting new technologies to produce on-farm high quality seeds and then in distributing those technologies and encouraging the smallholders in less-favoured areas to adopt them. It was clear that on-farm seed production represented efficient, profitable and sustained enterprise and that the farmers reap real benefits from these new, highly productive durum wheat seeds and the associated production technologies. The beneficiaries enthusiastically used the newly introduced varieties of durum wheat, which have increased crop yields 10–25 per cent.

Moreover, the project has effectively supported farmers to produce diverse, on-farm, durum wheat end products that consumers appreciate, such as flate bread, frike and cuscus.

The visit showed real potential for profitably marketing these products in rural and urban areas, and the benefits of processing these products for rural women and their families. In addition, this visit illustrated the importance of training in the related themes and skills for farmers, technicians and extension authorities.

The prospect of having a tangible impact on people’s lives is clear from the attitudes and views of those we visited; they have embraced the participatory community-based approach and started using the introduced technology and the seeds produced on farm.

Despite the obvious advantages of the project, there are some concerns:

• The burning technique for producing frike is still traditional and has high risks that result in sizable losses.

• The project lacks essential pillars for empowering beneficiaries, specifically in the area of marketing.

• The project could benefit from institutional capacity-building to help them establish their own cooperatives and improve their situation to enable better marketing conditions and better pricing.

• The project is not linked with formal institutional mechanisms for sustainable financial services, especially in this less-favoured area with high poverty levels.

From 1995 to 2006, there was a Jebal al-Hoss Agricultural Development Project in this area, funded by IFAD and co-financed by the Arab Fund for Economic and Social Development. The project had the objective of opening up areas for agriculture by reclaiming barren, rocky land. This project aimed to improve rural poor people’s incomes by giving them access to land and supporting them in crop and livestock production. This project had a positive impact since it distributed new land to people who were either landless or had very small properties. Some 22,000 ha of land were de-rocked, terrace cultivation was introduced, field crops were planted in rainfed areas and plantations of fruit trees were established in areas with supplementary irrigation. The project also supported livestock production, provided training in farming technology and promoted income-generating activities for women.

However, the field visit exposed some negative aspects of this experience. The distributed lands were not granted as private property, but rather with benefiting rights. Further, the whole cost of reclaiming the land was thrown on the beneficiaries; the government did not share any of the costs, which were too high for the beneficiaries. Moreover, scheduled instalment payments were disproportional with the land’s annual yield, especially during drought seasons. The de-rocking caused serious problems for the farmers: the rocks occupied a large part of the distributed land and getting rid of them was very costly. This problem was supposed to be taken into consideration during the project design. Some people mentioned, jokingly, that their burdens of debt might be equal to the problems they had before reclamation.

Learning event theme: microfinance

The literature claims that Jebal al-Hoss has a leading experience in microfinance supported by a project by the United Nations Development Programme (UNDP), and that this experience is unique in contributing to sustainable development in the remote poor areas in Syria. The visit showed that men in the Jebal al-Hoss community are involved in village funds (Sanadiq), which are self-managed and autonomous in all activities, including adopting financial practices consistent with local values. The funds initially were self-financed from members’ share capital and members could get small loans for up to three months. Female members participated in the funds’ management committees and could get loans easily without being asked for physical collateral. Women from different generations use these loans to run their own businesses, promote their businesses or support their families.

Other reports stated that the village funds are part of the Rural Community Development Project (RCDP) in Jebal al-Hoss, a joint effort begun in 1998 between the Ministry of Agriculture and Agrarian Reform and UNDP. RCDP is working to establish a national institutionalized microfinance system that suits cultural and social mores and also complies with international best practices, in order to alleviate poverty and achieve sustainable human development.

The Japanese Government and UNDP provided support during Phase II, from 2003 to 2007, to expand and legally consolidate the network of funds to extend the project as part of a national strategy to reduce poverty and generate employment opportunities.

The group of women we visited in Jebal al-Hoss, however, were not involved in these microfinance activities. There could be many reasons for this. The women we visited in the village claimed to have upper-class status, but we noticed that they were suffering and needed to be involved in this microfinance programme. We also noticed that boys are sent to schools while girls are not because of the families’ scarce financial resources. Some boys quit school to work in agriculture with their families. Another reason may be that the men are opposed to women’s participation in community activities. The IRDEN project in Jebal al-Hoss probably did not have a gender-sensitive approach.

The Sanadiq experience: Idleb Rural Development Project

Mohamed Sirelkhatim shares his insights on Sanadiqs, for example Village Funds from the Idleb Rural Development project.(IRDP) experience. The explicit and immediate objective of the microfinance activities under IFAD supported projects in Syria is to create a fully sustainable network of self-managed community-based microfinance institutions to finance income generating activities. These community based institutions which are well known as Sanadiq are based on the replication of the successfully implemented Jabel Al-Hoss Sanadiq‘s model of the former UNDP supported Jabel Al-Hoss Project. The Sanadiq model was further enhanced and adopted under the IFAD supported IRDP by including a minimum number of female shareholders to validate Sanduq creation, and more stringent lending terms and procedures. At village level, once a Sanduq is created, shareholders elect among them a male and female loan officer and an accountant to constitute the Sanduq Management Unit.

The performance of the functioning 18 Sanduq is satisfactory, with about 3000 shareholders (41% women), mobilizing SYP 4.1 million (US$ 85,431) as indigenous resources. The number of active borrowers exceeded 454 with an outstanding loan portfolio of SYP 19.3 million (US$ 406,000). These loans covered animal husbandry, trade (such as grocery stores, clothing stores, mobile phones stores), micro enterprises (such as sewing, shoe repairing, and embroidery) and agriculture. Average loan size is SYP 42 000 (US$ 885) with an average loan maturity of 11 months and 100% repayment rate.

Amazingly, the infant Sanadiq experience reported a net annual consolidated profit of SYP 203 291 (US$ 4,280) in 2008. Part of this profit is distributed to shareholders as dividends while the rest is allocated to members of Sanduq Management Unit members as compensation for their excellent admin works. In same villages, the distribution of dividends clearly attracted additional savings, either in number of shareholders or amount of share contribution.

Discussion with Sanadiq’s beneficiaries during the one-day field visit revealed wonderful experiences that are worth replicating or up-scaling. One Sanduq financed an initiative to establish and manage an embroidery enterprise through group lending to 7 members of the Sanduq. This initiative created jobs not only for these seven members but also for other 26 women. This is a good initiative that should be encouraged but with intense follow up by the Sanduq committee to reduce the Sanduq exposure to risk. Another Sanduq in Ehrazeen village managed to mobilise SYP 175 000 from 100 shareholders. The village sanduq which is then supported by SYP 1 million from the project has managed to disburse loans to 35 borrowers of whom 11 has fully repaid their loans, while the rest is timely paying their on going instalments. About 70% of these loans went to women to finance dairy products, sheep fattening, unitensils stores, spare parts stores, car mechanics workshops, and agricultural activities.