Liberia: MFDP Provides U.S.$700k to Enhance Local Rice Processing, Production

Minister Tweah exchanged document with Agriculture Minister Cooper at the Ministry of Agriculture in Congo Town

Signs cash collateral guarantee agreement with Afriland Bank

The Minister of Finance and Development Planning (MFDP), Samuel D. Tweah Jr., and Agriculture Minister, Madam Jeanine Cooper, on Thursday, March 26, 2020, signed a Cash Collateral Guarantee agreement with the Afriland Bank aimed at providing a financial remedy for major rice processors to enhance processing and production of rice in the Country.

Under the agreement, the MFDP provides an initial amount of US$700,000 to the Afriland Bank as cash collateral for utilization by three rice processing companies, including the Fabrar, in Kakata, Margibi County, Agriculture Infrastructure Investment Company and the Selma Agriculture Company, in Foyah and Voinjama, Lofa County.

The agriculture loan will capacitate these rice processing companies to purchase more paddy from smallholder rice farmers for processing on the domestic market.

The cash collateral will facilitate a revolving credit facility for rice processors at a lower interest rate and is expected to increase production and distribution of home-grown rice through purchasing and processing of paddy rice from farmers and cooperatives.

The government's decision comes against the backdrop of poor access to credit in the agricultural sector as was articulated by rice farmers and processors during a recent business climate meeting in Ganta.

Research shows that commercial banks' lending to the agriculture sector in South Saharan Africa including Liberia is less than 4%. With limited, or no access to finance, farmers find it very difficult to increase their yield, especially in rice production. The intervention by the government of Liberia is expected to create a paradigm shift in local rice production in the coming years.

This agreement, which is the initial step of the Government of Liberia in the agriculture sector signals the government's commitment to prioritize and ensure national food security by promoting the production, processing, and distribution as well as marketing of home-grown rice as manifested in the Pro-Poor Agenda for Development and Prosperity- the (PAPD).

The initiative contribution also marks the beginning of the implementation of the President, Weah's vision of ensuring a vibrant agricultural sector by transitioning Liberian farmers from subsistence to commercial farming system.

For accountability and transparency, and to ensure repayment of their loans, the Ministry of Finance will centralize all rice payments under the national budget and will ensure timely payments to rice processors through their designated accounts at the Afriland Bank.

Also, a team comprising the ministries of Finance and Development Planning, Agriculture and the Afriland Bank will effectively monitor and supervise the implementation exercise.

This economic relief though limited due to budgetary constraints is expected to help rebalance and rebrand the economy, especially amid COVID-19, which is rapidly spreading across the world. Growth in this PAPD value addition project to include other locally produced commodities will require the injection of additional capital for which the government will be seeking support from friendly governments, the donor community, and international organizations.

For his part, Finance Minister Tweah noted that "this was the first public-private engagement with the agriculture sector and will set the basis for more direct fiscal interventions."

He noted that 'trust' was the catchy phrase of this new arrangement and that beneficiaries must never lose sight in their commitment to repaying.

Agriculture Minister Madam Jeanine Cooper reiterated that providing financial access to farmers to increase food production is one of the newest hallmarks of the government of Liberia under the PAPD. This tripartite initiative by both ministries and commercial banks will help in opening agro-financing windows for productive farmers in the country.

On behalf of Robert Nkous, CEO of Afriland First Bank Liberia, Leopold B. Mbumen, acting CEO, expressed his gratitude to the Government of Liberia for the preferment of the bank as a partner in fostering the Pro-Poor Agenda for Prosperity and Development through this noble vision of food security in Liberia.

He added that this component of the agenda particularly ties in with Afriland First Bank Liberia strategic goals and thus makes it easy to execute.

Additionally, he warned potential beneficiaries that this project should be considered as one that could make or break other similar efforts from Government in the future. Hence the need to apply all effort to ensure that the project succeeds.

At the same time, the Government of Liberia through the Agricultural ministry has set a right basis for non-failure including the provision of funds as collateral to enable easy access to funding, and also a ready market to consume the products. All that is left is the implementation of the project to ensure that rice is actual planted and processed.

He concluded by saying that Afriland First Bank's role in this project will be to ensure that the funds reach the intended beneficiaries and together with the Government shall monitor and ensured that the beneficiaries utilize the fund in accordance with the Government's objectives.

Meanwhile, the President of the National Rice Federation of Liberia, Mohammed Kamara has informed the Daily Observer that rice processors receiving the loans are grateful to the government for the financial assistance.

"We are highly thankful to the government for the timely intervention in the rice sector. With this loan local farmers shall have the opportunity to market their paddy at various locations. This money will also help the processors to constantly supply the local market, especially the school feeding, government employees and other institutions," he told this paper through a telephone conversation.

It can be recalled that Minister Cooper upon taken over the Ministry told the Daily Observer that within the first three months in office, she will ensure that local rice processors are subsidized or provided with loans to boost the rice sector, something she said is part of her strategy to reduce rice imports.

The government of Liberia's intervention could mark a turning point in the agriculture sector. Not only will the production and consumption of home-grown commodities address goals one and two of the Sustainable Development Goals (SDGs) by putting money in the hands of local farmers, but it will also minimize capital outflow by reducing importation, strengthen the forex bureau market, and lower the commodity price index.

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