Financing Agricultural MSMEs in Liberia – Livelihoods and Employment Creation Project
To support UNDP in delivering the Pro-Poor Livelihoods and Employment Creation Project (“The Livelihoods Project”) in Liberia, the United Nations Capital Development Fund (UNCDF) undertook a financial study to assess the financing needs of farmers and other agricultural Micro, Small and Medium-Sized Enterprises (MSMEs). The study is important in informing the design of a financial mechanism to support farmers and agribusiness enterprises. The study was conducted using a qualitative approach, engaging stakeholders involved in the financial ecosystem and literature reviews.
The report presents an overview of Liberia in the context of the provision of financial services and other support to farmers and other agricultural MSMEs. The report also includes the study’s objectives, the key findings from the field missions, recommendations, and a financial mechanism for channelling funds to farmers and other agricultural MSMEs. The objective is to assess the financing needs of farmers and other agricultural Micro, Small and Medium-Sized Enterprises (MSMEs).
This report intends to provide finance through multiple means for agricultural MSMEs and provides insights into the financial study. The study’s key objective is to develop a financing mechanism to support the agriculture sector, interactions with multiple stakeholders, especially government officials, farmers, and financial service providers, proved that access to finance is a major challenge for the sector’s growth.
The report presents key recommendations to support agricultural MSMEs to promote agriculture in Liberia and meet the government’s vision. In accessing the sector’s needs, the report recommends supporting two types of Agricultural MSMEs – Rural Farmers and formal MSMEs that have organized registered businesses with some structure in place. For financing, it is recommended that Rural Farmers are provided with loans at very low concessionary rates and grants for performing farmers through Cooperatives and Village Loans Savings Associations. The report recommends that for formal agricultural MSMEs that are members of Business Member Organisations, they are provided with loans at concessionary rates, through Commercial Banks, with a guarantee for defaulting loans. Grant funding will also be provided to the businesses that show growth potential and repay their loans without default. To support these businesses, training, technical and other support should be provided to ensure they have sustainable businesses that enable them to repay their loans and at the same time grow their businesses.