IFAD holds technical meeting with banking institutions |10 April 2018

Local financial institutions have been provided with technical advice and support from the International Fund for Agricultural Development (Ifad) to better cater for farmers.

A meeting was hosted by the Ministry of Fisheries and Agriculture (MFA) at Maison Collet last week with the objective of building the capacity of financial institutions that provide credits and loans to farmers.

It was facilitated by Dr Jonathan Agwe, the senior technical specialist in the Policy and Technical Advisory Division (PTA) of the Ifad.

Dr Agwe was in the country with the aim of helping MFA with a project which is expected to follow the first Competitive Local Innovations for Small Scale Agriculture or Clissa Project as well as the revision of certain mechanisms and policies that support agriculture.

In attendance were representatives from Barclays Bank, Nouvobanq, Al Salam Bank, Development Bank of Seychelles (DBS) and the Central Bank of Seychelles (CBS).

Also present were various economists, policy analysts and officers from the Ministry of Fisheries and Agriculture.

Antoine-Marie Moustache, the principal secretary for Agriculture, kick-started the meeting by explaining to those present the importance of investing in the agricultural sector.

He stated that the agricultural sector has been facing varying challenges and set-backs for a couple of years and hence banks have shied away from the sector in favour of low-risk ones.

Dr Agwe’s presentation focused on how to better segment and categorise clients in the agricultural sector as well as how to merge traditional and innovative products among others.

“This meeting has looked into how to encourage financial institutions, especially commercial banks, to get into financing agriculture,” Dr Agwe stated.

He explained that some of the main issues that were raised during the meeting were the perceived risky nature of the agricultural sector and the reluctance of the financial service providers (FSPs) in offering loans to that sector.

“The issue of this sector being risky is a perception that is not completely true because it is not risky if you disaggregate that sector into various segments. So you present the segments that have risk to the FSPs that can take those risks and you present segments that are less risky to the FSPs who are risk adverse such as commercial banks.”

Another aspect that was covered was the manner in which farmers can better access market outlets in order to sustain their loans or line of credits.

Dr Agwe’s conclusion from the technical meeting is that the local financial sector spear to not understand the agricultural sector, and because of this lack of understanding there is a deficiency in tailored instruments that meet the need of that sector.

“Commercial banks need to know the farmers, and the farmers need to know the commercial banks. And once these two can communicate the big problem of high interest rate to risky farmers will be reduced.”

Minister Pamela Charlette, who was also in attendance at the latter part of the meeting, added: “There is a lot more to be done in regards to educating the banks about the farmers.”

“Moreover there is a need to have more cooperation and collaboration between the banks and the Seychelles Agricultural Agency for instance. This is because the agency knows its customers hence they will be able to advise the banks on specific cases that come to them.”

Minister Charlette also expressed the necessity for the government to take on innovative and holistic approach to devising its policies that will in turn be conducive to the agricultural industry.

“We need to create a bigger picture and see all the chains that link together and ensure that the policies we make in other ministries do not affect our agricultural strategy,” she concluded.