FAO, State Bank connect farmers with credit for agri business in Balochistan

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FAO, State Bank connect farmers with credit for agri business in Balochistan

March 6, 2018

QUETTA: State Bank of Pakistan (SBP) Quetta and the Food and Agriculture Organization (FAO)jointly organized a workshop with representatives of 10 leading Banks in Balochistan and farmers from a range of male and female Farmers Marketing Collectives (FMC’s).

The following Banks participated in this event: Bank Islami Pakistan (BIPL); Bank Alfalah, Askari Bank, Habib Bank Limited (HBL), United Bank (UBL), National Bank of Pakistan (NBP), Zarai Taraqqiati Bank (ZTBL), MCB, Allied Bank (ABL) and the State Bank of Pakistan (SBP). All participating Banks have their branch network across all districts of Baluchistan.

The objective of this event was to showcase economically viable agri business cases that were developed through the USAID supported Balochistan Agriculture Project (BAP) in 8 northern and 6 southern districts of Balochistan through the Australia Balochistan Agri Business Programme (AusABBA). These business cases, owned and operated by organized farmers, are ready for upscaling their production but the farmers are in urgent need of bank credit to advance their business to the next level.

During discussion, the farmers described their business cases on dates, grapes, mulberry, wool, apples, onions and livestock while the female farmers presented their businesses such as sheep fattening, carpet production and apricot processing. In particular the wool related activities, including mechanical shearing, the wool collection and grading centre and carpet weaving attracted a lot of attention from the participants. But also the proposal of FMC Mekran to establish a cold store for dates storage and a packaging centre thereof was found rather interesting by the Banks.

FAO offered support, through the AusABBA programme, to identify the most professional Farmers Groups (FMCs) and to help them developing a bankable business plan. Depending on the district and commodity FAO might also be able to train, coach and monitor the various agri businesses.

Participants also visited the FAO / AusABBA Integrated Kitchen Garden at Western Bypass (BARDC). The women from Quetta district emphasised the importance of the kitchen gardens to feed their children and themselves with healthy vegetables and poultry products and to generate some income from such in-house activities.

The idea was launched that under the umbrella of the State Bank the individual banks should consider to develop a new financial product for women only: (micro) credit for integrated kitchen gardens in Balochistan in line with recently launched scheme by SBP for women Entrepreneurs (Re-Finance and Credit Guarantee Scheme for women Entrepreneurs)in August, 2017. A small loan per women community organization could trigger the establishment of kitchen gardens in many districts. The (public) benefits in terms of better nutritional status and health, less medical expenses and more productive people outweigh the investment costs many times.

The FAO project manager Marcel Stallen stated that the success of this meeting and the proposed joint FAO and SBP activities will be measured by the volume and number of loans that are provided to farmers in Balochistan in the coming years. Balochistan needs role models of successful businesses that have benefited from agricultural credit.

Sajid Ali Shah, Chief Manager, State Bank of Pakistan during his discussion pointed out that he liked the idea of Match-Making introduced by FAO, between farmers and Banks. He said that SBP BSC since last few years is working to create linkages between these stake holders by various awareness sessions under SBP financial inclusion programs. This is a unique opportunity for the commercial banks to be directly engaged with farmer groups which have worked with FAO for the past couple of years and have sufficient business acumen. He added that SBP will ensure that all banks provide maximum services to the farmers of Balochistan and at the same time reducing hurdles caused by the unavailability of collaterals. The women enterprises will also be served with credit facilities with subsidised mark-up rates in line with SBP resolve and their credit policies. The Chief Manager showed his satisfaction on this interaction and hoped to see more of such events in the near future.

At the end of the event it was concluded that FAO will send 6 tangible agri business cases (project briefs) to the State Bank for dissemination among the commercial banks of the region. Each case has to be feasible and profitable in the short and medium run to generate more business for farmers within the district. Each bank can adopt one or more of these business cases after due diligence and they should extend credit as per their loan procedures to such farmers on commercial basis.

It was also proposed that the State Bank should organize a big “match making” event (mela) in Quetta in April. Banks can showcase their financial products and FAO will invite male and female representatives of all FMCs for their awareness and need matching.

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