Innovative Agriculture Loan for Farmers in Ninawa

Access to quality financial services, especially for rural small-scale farmers is a challenge anywhere in the world. USAID-Tijara microfinance institution (MFI) partner Tal’afar Economic Development Center (TEDC) launched a new agricultural loan product focused on small-scale rural farmers to help them meet this challenge in the northern Iraq Province of Ninawa.

At a ceremony to disburse loans totaling $26,000 to six small-scale farmers at the TEDC headquarters in Al-Qala’a, Tal’afar on Wednesday, July 21st, the Executive Manager, Mr. Bashar Ali Redha, said that the MFI is ready and plans to expand rural-based lending. The ceremony to disburse the loans to the six farmers was presided over by the TEDC Board Chairperson, Mr. Abdullah Wahab, two other Board members, a USAID-Tijara local official and other TEDC staff.

Small-scale farmers in rural areas such as those in the Ninawa Province face numerous obstacles. They cannot normally access the financial services they need from the three banks in the province. Also, up until now, they could not access loans from MFIs due to limited access to more limited guarantee choices. Small-scale farmers further lack the capital needed to invest in the irrigation technology needed to boost productivity and profits. Agriculture is a key component of Ninawa’s economy, particularly cereal production, with 39% of the 2.4 million population living in rural areas. Of the nearly one half million living in the province below the poverty line of just over U.S. $2 per day, over 80% are in rural areas.

The agricultural loan product TEDC now offers is an innovative one that comes with a longer repayment period, a grace period of three months and larger loan sizes of up to $5,000. Innovation comes from repayments scheduled according to the seasonal outputs of farmers. It also comes from how the loan can be guaranteed – one guarantor or co-signer with means (and not necessarily a salaried government worker), witnessed by two others.

This product will add to TEDC’s already impressive menu of loan products to small-scale manufactures, traders and service providers. MFI performance and profitability should increase. The MFI, since its founding in July 2007, has a portfolio of $ 3.5 million to almost 2,700 clients and near perfect loan recovery. According to Mr. Qasim Mohammed Younis, one of the farmers receiving his loan, “I needed money to dig a tube well to solve the problem of water scarcity for my livestock. I tired to get a loan from one of the banks in my district but they did not approve it. Through TEDC, I can use the $5,000 to make these investments to improve my family’s income. I can also start saving to buy a small truck to sell my dairy products in the city.”

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