Kosovo agriculture development gets support

11/10/2012

Two programmes make it easier and less risky for banks to lend and farmers to borrow.

By Muhamet Brajshori for Southeast European Times in Pristina -- 11/10/12

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Farmers in Kosovo will find it easier to obtain loans under the initiatives. [Reuters]

The Kosovo government signed an agreement with the six largest banks operating in Kosovo on an agricultural credit guarantee fund to enable farmers to obtain loans and lessen the perception of agriculture as a high-risk sector.

The fund, backed by USAID, would facilitate a guarantee credit of 20 million euros to farmers.

"Agricultural loans were the 'bottleneck' for development of the agricultural sector. This fund provides the opportunity to have an activation of financial resources and a much larger investment in the agriculture sector," Adil Behramaj, spokesperson for the ministry of agriculture, told SETimes.

Previously, farmers could hardly access bank loans and those who obtained loans did so at an average annual interest rate of 22 percent.

Agricultural loans accounted for 3.6 percent of the total volume of loans, or 40 million euros.

Behramaj said the fund is one of several steps to be undertaken to help the development of agriculture.

"It is foreseen to facilitate farmers' access to agricultural credit, [allow a] collateral coverage rate of 50 percent, equalise treatment with other sectors, [provide a] favourable policy on interest rates and expand the portfolio of the agriculture sector," Behramaj said.

The objective of USAID’s Development Credit Authority is to encourage increased lending by banks to underserved sectors, such as agriculture, that banks may perceive as too risky, according to Taisha Jones, USAID desk officer for Kosovo and Albania.

The Authority provides participating banks with a partial, 50 percent loan guarantee, to minimise concerns about excessive risk to such sectors.

"Once the banks become familiar with lending to these underserved sectors through the DCA programme, and come to understand that these sectors are not as risky as initially perceived, banks will typically extend additional credit to these sectors after the programme concludes," Jones told SETimes.

Jones said the Authority has mobilised $1.9 billion in additional credit to borrowers in 70 countries throughout the world, including in the Balkans.

"Credit guarantees have been used by USAID in a variety of sectors including small and medium enterprises, agriculture, microfinance, housing, water, infrastructure, energy, education, health, and environment," she said.

The amount of the loans varies between 5,000 and 250,000 euros.

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USAID also supports the Kosovo agricultural sector through the New Opportunities for Agriculture project.

"The project provides technical assistance to farmers and food processors so they can become more competitive, thereby increasing sales and reducing the import of foreign agricultural products that can be grown in Kosovo," Jones said.

In the past decade, USAID has provided similar technical assistance to Croatia, Bosnia and Herzegovina, Montenegro, Serbia, Albania and Macedonia.

"In the past, the loans which we have taken have just harmed us. I hope that now by this I will be able to invest more and so increase the productivity of milk. This will secure for my family a good source of income and sustainable employment," Shefqet Alshiqi, a farmer from Pristina, told SETimes.

This content was commissioned for SETimes.com.
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