More than 50,000 vulnerable rural households in Togo will benefit from a $35 million project that aims to spur inclusive rural economic growth and create employment opportunities in rural parts of the West African country through a value chains approach. This was contained in a financing agreement signed on Thursday by the government of Togo and the International Fund for Agricultural Development (IFAD).
The agriculture sector is the backbone of the economy of Togo. It provides 60 percent of employment and contributes 41 percent of GDP. Majority of the Togolese population depends on subsistence agriculture. But despite the importance of the agricultural sector to the economy, banks hardly lend to farmers.
“Although the agriculture sector remains the main employer for young people, especially women in Togo, the financial sector operators hesitate to provide them with credit,” said Lisandro Martin, Regional Director for West and Central Africa Division of IFAD. “ProMIFA will facilitate sustainable access to financial services tailored to smallholder farmers and micro, small and medium-sized agricultural enterprises so they can develop their activities and gain access to markets.”
The new financing agreement is for the Shared-risk Agricultural Financing Incentive Mechanism Support project (ProMIFA).
The financing includes a $3.7 million loan and $3.7 million grant from IFAD. It will be co-financed by private sector financial institutions ($6.3 million), the Government of Togo ($3.8 million), and the beneficiaries themselves ($1.8 million). The financing gap of $15.6 million will be covered by other sources of financing or by the IFAD resource allocation cycle for Togo for the period 2019-2021.
A statement by IFAD says the new project will first develop production and marketing of rice, market gardening, maize and poultry, in order to improve the food and nutritional security of rural communities.
ProMIFA aims to create jobs and generate income for rural people living in the project areas, and to ensure that at least 30 percent of the project’s participants are women and 40 percent are young people.
IFAD notes that the project will help facilitate access to financial services for rural communities by increasing loans to smallholder farmers and to small and medium-sized rural enterprises, while also improving financial literacy. It will also support the establishment of a financing and risk-mitigation mechanism, develop new financial products and improve the quality of financial services.
ProMIFA will also provide training to financial institutions to enable them to assist smallholders in drafting business plans and provide them with financial products that meet their needs.