Agricultural Finance

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areas of Intervention


Access to finance for the procurement of inputs, the expansion of mechanisation services and the provision of working capital for commodity trading is critical to attract investments in agricultural value chains. Despite the expansion of products and channels within the financial services sector, the accessibility to financial resources and services for the agricultural sector continues to be notably limited and constrained. The perceived riskiness of agriculture owing to the sector’s exposure to frequent price fluctuations, threat of crop failure, diseases, and extreme weather events, plays a major role in limiting the access to finance within the sector. Another significant challenge within the sector pertains to the viability of agricultural assets, specifically land titles and property rights. These assets often pose difficulties when used as collateral, particularly in rural areas because of the challenges associated with their verification. Agricultural businesses and farming typically have variable and seasonal income streams which can be associated in some instance with long crop maturation periods before investments start to yield steady or exponential returns. This is a major disincentive for lending in the sector, especially for the expansion of investment in cash crops. 

Additionally, high interest rates, stringent collateral pre-requisites and the absence of insurance schemes are also barriers to accessing finance in the agricultural sector. The GoSL has in the recent past embarked on a series of programs to expand access to finance for actors within the sector. In 2020, the government set up an Agricultural Value Chain Financing (AVCF) model and established a $10m Agriculture Credit Facility (ACF) targeted at input providers in the country. The AVCF was specially designed to cushion the exchange rate variation risks by financing imports in United State Dollars, while allowing the input creditors to pay back in Leones. Although only two (2) input companies accessed the credit facility, the financing model proved quite effective in shielding the companies from the depreciation that has hit the Leone in recent times.