Liberian Farmers Repay 96% of Loans, Get New L$2.5 m
MONROVIA, June 9 (LINA) -The United States Agency for International Development Food and Enterprise Development (USAID FED) Program for Liberia and Liberian Entrepreneurial & Asset Development (LEAD) microfinance institution are teaming up to finance Liberian farmers and small agribusinesses with a second round of loans worth L$2.5mn.
In November 2013, USAID FED and LEAD facilitated loans worth L$1.6million to 120 farmers who used the money to expand farmlands, purchase agriculture inputs and expand marketing channels.
After the six-month term, 96 percent of the loans were paid back in full, proving that farmers can use extra capital effectively and pay back loans on time.
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.
“Contrary to what Liberian banks and lending institutions have professed, farmers have the highest repayment rate compared to borrowers in other sectors”, says Allen Gweh, LEAD’s Country Director.
“It’s about time the financial institutions start looking at small businesses that are desperately in need of help to expand,” Gweh added, according to a release sent the Liberia News Agency.
Liberian farmers face barriers in accessing credit because they have inadequate or no business records and they 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, 30 members of the Menlehkoyee vegetable farming group in Nimba County received a loan worth L$250,000.
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 L$487,000, recording a profit of L$237,000.
“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,” says Yar Yeanue, the Chairwoman of Menlehkoyee group.
LEAD is a recipient of a grant from The United States African Development Foundation (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 percent interest rate.
The USAID FED Program for Liberia aims to reduce hunger and promote food -security for Liberians through increased agricultural productivity and profitability in rice, cassava, vegetable and goat value chains. It is implemented in six counties: Bong, Nimba, Lofa, Grand Bassa, Margibi and Montserrado.