The Minister of Finance and Development Planning, Minister Samuel D. Tweah, and the Minister of Agriculture, Madam Jeanine Cooper, on Thursday, 26 March, signed a cash collateral guarantee agreement with a local commercial bank, Afriland Bank, aimed at providing a financial remedy to rice processors in the Country.
Under the agreement, the Ministry of Finance and Development Planning will provide an initial amount of Seven Hundred Thousand United States Dollars (US$700,000.00) to the Afriland Bank as cash collateral for utilization by various rice processors to purchase paddy rice.
Speaking at the signing ceremony, Thursday, March 26, at the Agriculture Ministry in Congo Town, Minister Jeanine Milly Cooper said signing of the loan agreement is a millstone for the country.
Minister Cooper said in the wake of the deadly Corona virus globally, countries that are importing rice and other commodities are considering shutting down their borders, which means Liberia that depends on importation of goods may face serious challenge in the near future.
She reiterated that providing financial access to farmers to increase food production is one of the newest hallmarks of the Government of Liberia under the PAPD. This tripartite initiative by both ministries and commercial banks will help in opening agro-financing windows for productive farmers in the country.
The cash collateral will facilitate a revolving credit facility for rice processors at a lower interest rate and will increase production and distribution of home-grown rice by purchasing and processing seed rice from farmers and cooperatives in the country. The Government of Liberia’s decision comes against the backdrop of poor access to credit in the agriculture sector as was articulated by rice farmers and processors during a recent business climate meeting in Ganta, Nimba County.
Research shows that commercial banks’ lending to the agriculture sector in South Saharan Africa including Liberia is less than 4%. With limited, or no access to finance, farmers find it very difficult to increase their yield, especially in rice production. The intervention by the Government of Liberia is expected to create a paradigm shift in local rice production in the coming years.