IFAD to Support Microcredit and Microfinance Project in the Republic of Djibouti

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IFAD to Support Microcredit and Microfinance Project in the Republic of Djibouti

Press release number: IFAD 18/03

Rome 21 February, 2003 – A loan agreement was signed today at the International Fund for Agricultural Development (IFAD) headquarters by H. E. Yacin Elmi Bouh, Minister of Economy, Finance and Planning for Djibouti and by Mr. Lennart Båge, President of IFAD. The loan, for an amount of USD 3.59 million, will help fund the Microfinance and Microenterprise Development Project, with a total cost of USD 3.94 million.

The Republic of Djibouti is still recovering from a period of severe civil strife, which was settled only in 2001. The armed conflict resulted in considerable loss of life, livestock and economic and social infrastructure. The living conditions of the poor are worsening, especially in the rural areas, where poverty is seven times higher than in the capital city.

Both Government and IFAD recognize that, for most households, lack of access to financial services is a key constraint on increased production, productivity and incomes. The demand for financial services vastly exceeds supply, and there is no organization or institution in the country in a position to meet the needs for these services on a sustainable basis.

The project is national in scope and covers rural, peri-urban and urban areas. Of the target group of approximately 200000, corresponding to roughly 30000 households, 150000 are from rural areas and an additional 50000 from peri-urban and urban areas. The target group will comprise people earning a living from animal husbandry, gardening and agriculture, fishing, handicrafts and other small-scale income-generating activities. It will also include young unemployed who desire to start their own small businesses. Special attention will be paid to households headed by widows or divorced women, who are considered amongst the most vulnerable members of the community.

With this project, IFAD will have financed four projects in the Republic of Djibouti, for a total loan amount of USD 7.96 million.

IFAD is a specialized agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 628 projects in 115 recipient countries and in the West Bank and Gaza for a total commitment of approximately USD 7.9 billion in loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty. IFAD makes the greater part of its resources available to low-income countries on very favorable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.