Rome–About 99, 200 Burundian rural households in 17 provinces will benefit from a financial agreement signed today between the International Fund for Agricultural Development (IFAD) and Burundi.
According to a press release today, the agreement would enhance the availability of financial services in rural areas where demand currently far outstrips supply. Particular attention will be given to the most vulnerable groups, including women and young people.
The financing agreement of $ 24.9 is for the Project to Support Agricultural and Rural areas.
Financial Inclusion in Burundi (PAIFAR-B) was signed in Rome by Gilbert F. Houngbo, President of IFAD, and Phil Domitien Ndihokubwayo, Minister of Finance, Budget and Privatization of Burundi.
The total cost of the project is US$38.6 million, including a $24.9 million Debt Sustainability Framework grant from IFAD. The project will be co-financed by the Government of Burundi ($2.6 million) and by the participants themselves ($2.1 million).
In Burundi, rural populations have extremely limited access to financial services. To start agricultural or non-agricultural activities, they often have no choice but to borrow from traders and “loan sharks” who can charge excessive interest rates as high as 1,000 per cent.
Many of the rural poor engage in small scale farming but their efforts are curtailed by the poverty.
How it will work
PAIFAR-B aims to provide access to financial as well as other diversified services, in order to foster the emergence of a wide range of income generating enterprises, with a focus on assisting the rural poor. The project will involve various partners, including the Bank of the Republic of Burundi for regulatory issues, as well as the private banking sector for managing funds and refinancing the microfinance establishments (MFEs).
The money would be used to finance the small-scale farmers, traders, processors, craftsmen and the cooperatives working in the agricultural and non-agricultural rural sector.
This would also enable smallholder farmers involved in the production, the processing and the marketing of crops such as beans, rice, bananas, potatoes, avocados and maize find market for their products for the wellbeing. PAIFAR-B will also contribute to improving the food security and economic and social well-being of the target populations.
Since 1979, IFAD has financed 12 rural development programmes and projects in Burundi, representing an investment of $235.1 million or $460.4 million when co-financing is included. These programmes and projects have directly benefited more than 712,779 rural households.