Farmers in Liberia have repaid about 96% of the loans received from the United States Agency for International Development Food and Enterprise Development or USAID FED Program for Liberia and Liberian Entrepreneurial & Asset Development or LEAD.
In November 2013, USAID FED and LEAD facilitated loans worth $1.6mn LD to 120 Liberian farmers, who used the money to expand farmlands, purchase agriculture inputs and expand marketing channels. According to a release issued in Monrovia, after the six month-term, 96% of the loans were paid back in full, proving that farmers can use extra capital effectively and pay back loans on time.
The United States Agency for International Development Food and Enterprise Development Program for Liberia and Liberian Entrepreneurial & Asset Development microfinance institution are teaming up to finance Liberian farmers and small agribusinesses with a second round of loans worth $2.5mn Liberian Dollars (approximately $29,500 USD).
As a result, LEAD has released more capital for qualifying farming cooperatives supported by USAID FED that divide the money among members. The loans are expected to benefit over 250 farmers and agribusinesses in the coming six months.
According to the Country Director of LEAD, Mr. Allen Gweh, Contrary to what Liberian banks and lending institutions have professed, farmers have the highest repayment rate compared to borrowers in other sectors. "It's about time the financial institutions start looking at small businesses that are desperately in need of help to expand."
Liberian farmers face barriers in accessing credit because they have inadequate or no business records and lack collateral for loans. Banks often see farmers as a risky investment because of the misconception that non-repayment is common. In the first round, thirty members of the Menlehkoyee vegetable farming group in Nimba County received a loan worth 250,000 LD.
The Menlehkoyee Farmers Group in Nimba County
In five months, the group had already earned enough money to repay the loan and interest. By the end of six months, the group earned 487,000 LD, recording a profit of 237,000 LD.
"It's hard to make my farm profitable on my own. We can't get enough money to expand or start a meaningful business. Having a loan has given our group a new opportunity to create something meaningful," said Yar Yeanue, the Chairperson of Menlehkoyee group.
LEAD is a recipient of a grant from the United States African Development Foundation or USADF, which is an independent agency, established to support African designed and driven solutions that address economic and social problems in conflict and post-conflict communities. In addition, LEAD has received support from the Central Bank of Liberia's Loan Extension and Accountability Facility (LEAF). Each loan has a term of six months and a 16% interest rate.
The USAID FED aims for Liberia is to reduce hunger and promote food security for Liberia through increasing agricultural productivity and profitability in rice, cassava, vegetable and goat value chains.