The Board of Directors of the African Development Fund, the African Development Bank Group’s (AfDB’s) concessional lending window, has approved a grant US$6.4mn to Gambia to implement the Incentive-Based Risk-Sharing System for Agricultural Lending Establishment Project (GAMIRSAL)
The project will increase access to loans from financial institutions for agricultural value chain stakeholders. It will mobilise resources to promote private investment in agricultural value chains and sustainably transform Gambian agriculture.
The project, which will run from 2023-2025, will also expand financial institutions' access to risk mitigation instruments with a view to attracting more investments to the agricultural sector. These institutions will improve their knowledge of the agricultural sector and strengthen their skills in the analysis, financing and portfolio management of agricultural projects. Furthermore, agricultural value chain entrepreneurs will strengthen their skills in financial and credit risk management and climate risk management.
The project is expected to provide beneficiaries’ financing that is tailored to their needs, boosting their productivity and strengthening their resilience to climate change. In turn, this will drive agricultural growth, increase exports, and enhance food and nutrition security. The modernisation of agricultural value chains for inclusive growth is the only priority area identified in the Bank's 2021-2025 Country Strategy Paper for The Gambia.
All agricultural sector projects will benefit from the risk-sharing mechanism that will be established under the project.
Gambian agriculture receives only about 4% of total financing to industry, and at high interest rates and without adequate collateral. The effects of climate change have made the sector less competitive, thus reducing the volume of loans available to farmers and agribusinesses. This is compounded by the informal structure of agricultural value chain stakeholders, the low level of mechanisation, and the predominance of rain-fed farming, which is highly vulnerable to climate change. Access to finance remains a challenge for agricultural value chain entrepreneurs, mainly due to the lack of relevant risk mitigation instruments and innovative products.
“The Incentive-Based Risk-Sharing System for Agricultural Lending Establishment Project will contribute to the achievement of strategic priorities to stabilise the economy, stimulate growth and transform the economy,” said Marie-Laure Akin-Olugbade, acting vice president of the AfDB’s Regional Development, Integration and Service Delivery department.
“It will also help to modernise agriculture and fisheries with a view to ensuring sustained economic growth as well as food and nutrition security for poverty reduction. It will strengthen the role of the private sector as the engine of growth, transformation and job creation in The Gambia,” she added
The project is aligned with two of the Bank's High-5 priorities: “Feed Africa” and “Improve the quality of life for the people of Africa”. It is also consistent with its Gender Strategy 2021-2025, the Jobs for Youth in Africa Strategy 2016-2025 and the African Emergency Food Production Facility.