At least 250 Liberian farmers and those engaged in agri-businesses in the country are expected to benefit from a US$29,500 loan. The money is intended to expand small businesses within the next six months, beginning this month.
The United States Agency for International Development Food and Enterprise Development (USAID FED) and the Liberian Entrepreneurial & Asset Development (LEAD), a microfinance institution, have teamed up to finance Liberian farmers and small agribusinesses.
In November 2013, USAID FED and LEAD facilitated loans totaling L$1.6 million to 120 farmers. Those farmers 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.
“Contrary to what some Liberian banking 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,” Mr. Gweh added.
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.