Maravi

(DAILY MAIL) $13m facility set up

$13m facility set up
By KASUBA MULENGA

GOVERNMENT has launched the Rural Finance Programme (RFP) with a concessional loan facility of US$13.8 million from the International Fund for Agricultural Development (IFAD). Minister of Finance and National Planning, Ng’andu Magande, said yesterday during the launch in Lusaka that RFP would respond to rural financial services in Zambia that had become indisputable.

“Little progress has been made in creating a conducive environment for the operations of financial institutions. This is the reason for failure of the formal banking sector to actively participate in capacitating many rural inhabitants,” Mr Magande said.

He said many people in rural areas had limited access to financial services because they failed to provide collateral to enable them borrow funds for business ventures. Mr Magande was also concerned that while some people in rural areas had relatively prosperous enterprises and valuable property, they did not have the major asset of land.

“They are always in a permanent state of temporary residence. This is the major impediment to anyone who wishes to enter into contracts or provide credit to these rural dwellers,” he said.

Mr Magande said some of the people who had made some surplus incomes in rural areas were compelled to invest in secure properties and savings accounts in urban areas.

This demand for financial institutions in rural areas manifested itself in relatively poor households and individuals who needed to secure earnings through formalised savings, but could not qualify to open accounts in commercial banks.

Financial institutions were also needed in rural areas to cater for small-scale rural enterprises and marketing groups.

Mr Magande said institutions were vital for contract farming, production companies and other medium to large-scale rural enterprises that needed better access to rural banking deposit, credit and efficient money transfer services.

He said salaried workers like agricultural staff, teachers, health and military personnel would also greatly benefit from rural financial institutions’ safe and efficient money transfer services.

Mr Magande said the launch of the RFP would therefore increase the use of sustainable financial services in rural parts of the country.

This would be achieved under the development of community-based financial institutions, promotion of rural banking services and credit facility for contracted small-scale production.

The other components of the RFP would be innovation and outreach facility, policy, institutional and management support.

Mr Magande said in coming up with RFP, Government recognised the need for provision of financial services to low-income groups in rural and peri-urban areas of the country as one of the hindrances to economic growth and poverty alleviation.

He said the programme would also support expansion of the rural branch network of the National Savings and Credit Bank while making funds available through an innovation and outreach facility to pilot new products and approaches.

And IFAD country programme manager for Eastern and Southern Africa Division, Jens Sorensen, said the RFP would target the rural poor people to help them come up with enterprises that would uplift their living standards.

Labels: MAGANDE, RURAL FINANCE PROGRAMME

posted by MrK @ 4:13 AM