How to outreach agriculture loan by micro-credit lenders?

A seminar in Dhaka held deliberations on how the micro lenders can play more effective role in providing credit in agriculture and the related business. The three day seminar entitled 'National Dissemination Forum on Microfinance for Agriculture' was attended by noted economists, development activists, and NGO' representatives from Bangladesh and a number of Asian countries. The three-day seminar was organised by Bangladesh Bank, AFRACA and ASA. The topic of the seminar is very vital that are being discussed often now in public and private forums among the developing countries especially in Asia.       
About 27.1 million borrowers are enjoying loan facilities in Bangladesh while annual loan utilisation in agriculture sector is Tk 150367.96 million. Out of the total disbursed loan, Tk 116075.30 million is used in cropping, Tk 19043.44 million in livestock, and Tk 15249.22 million goes for fisheries. Of the total agricultural loan, 15.44 per cent is used in crop production, 3.39 per cent in the field of fisheries and 10.93 per cent for the live stock, i.e. 30 per cent of the total loan disbursed by the micro finance institutions (MFI) goes to agriculture sector. The target for agricultural loans is Tk 145950 million for the current fiscal year (2013-2014), which is 3.30 per cent higher than that of the previous year.
An amount of Tk 146670 million has been disbursed during 2012-13, of which the sharecroppers got Tk 11060 million and the woman farmers got Tk 12450 million. This resulted in increase of food production in the country. Due to timely supply of credit in agricultural sector, the country now produces 36.10 million tonnes food annually. This has made Bangladesh self-reliant in food production. According to the Institute of Microfinance' research, 36 per cent of the total income increased due to micro-credit programme. On the other hand, around 2.0 per cent of the total population is coming out from the poverty trap every year because of microfinance intervention.
Special attention needs to be given to bring momentum to this sector. Some specific recommendations are made to bring dynamism in the management of micro finance particularly relating to disbursement of agriculture loan. The recommendations are: (1) Establishment of specialised MFIs or rural banks, while big MFI's may allow for establishing micro finance bank; (2) There may be tailor made and diversity of products based on geographical territory. Provisions of insurance coverage for covering emergencies and disasters should also be introduced; (3) As regards disbursement of loan emphasis should be given on production, marketing, food processing, packing, tools, storage and training; (4) Loan recipients should be restricted to small farmers, sharecroppers, fishermen, agro-based traders and business men: (5) Presently only 35 per cent people have scope for making savings. MFIs may allow receiving savings of the non-members to reach above 80 per cent of total populations: (6) Clients of the formal institutions spent 16 per cent costs out of interest which is quite high. This should be reduced through bringing efficiency and simplicity in the process; (7) Specialised banks may take measures to increase efficiency of their staffs through providing training and exposure visits for overseeing and simplification of procedure and avoiding bureaucracy; (8) Steps should be taken for alternative education system, equal and justified portion of assets ownership, awareness building and increase number of woman politicians; (9) Government' subsidy should continue to irrigation, fertiliser, seeds, electricity etc. (10) Central bank should extend soft loans to the MFIs of the country; (11) MFIs should be given a fixed target (10-15 per cent) for agri-loans against total lending of their yearly budget; (12) Installation of automation system should be introduced for ensuring transparency and accountability; and (13) Interest rate should not be less than 12 per cent flat; otherwise it might be difficult for the MFIs to survive. A leading NGO of the country, ASA developed specialised software to make its programmes and management automated which ensures transparency and accountability. ASA initiated loan program two decades ago with loan from PKSF and commercial banks and did not get any donation for the purpose. The organisation took initiatives to train up 4000 health volunteers and 250000 group leaders for improving health gradually.
The writer is an NGO activist. [email protected]