BAMAKO, March 31, 2015 - In Mali, a smallholder farmer is refused a loan seven times out of ten. In the eyes of most commercial banks, agricultural loans for small scale farmers seeking to grow their businesses are regarded as high risk given the constraints of agricultural planting seasons, unpredictable weather conditions, low production rates, and limited technical or management skills of farmers and livestock breeders.
In addition to this, creating guarantees for this kind of credit remains challenging in an environment where the land property system is poorly defined and the judicial system discourages guarantees. Financial products proposed by banks in Mali are often not adapted to the needs of farmers, one example being the lack of access to long term credit which is often necessary for farmers starting out in the orchard industry producing mangos, papayas, bananas, or cashew nuts. Financing is more often than not provided at the end of an agricultural campaign, when farmers need it the least.
“Malian banks have a commercial focus and not an agricultural one which is why they struggle to accompany agricultural activities. A lack of knowledge in the domain also makes banks hesitant to provide agricultural lending. For farmers, the cycles of repayment and credit present a challenge as they require financing and receive income on a seasonal basis,” explains Moussa Sylvain Diakité, a mango producer and exporter based in Bamako.
To scale up the financial needs of smallholder farmers in Mali, boost agricultural production, and increase the number of small and medium enterprises (SMEs) in the country, the World Bank and the Malian government have teamed up to implement the Agricultural Competitiveness and Diversification Project, which aims to provide support to both Malian farmers and commercial banks as they work together to advance agricultural development in the country.
The project’s main objective is to enhance the performance of supply chains for a range of agricultural, livestock, and fishery products for which Mali has a strong comparative advantage. It focuses more specifically on private sector development, scaling up investments, and creating access to funding and commercial infrastructure.
In order to best achieve this, World Bank financing will provide technical support to entrepreneurs as they apply to commercial banks for funding, strengthen the financial management capacity of these entrepreneurs, and build the capacity of commercial banks' staff so that they better understand agriculture development