Access to Credit

Increasing access to credit for impoverished and underserved peoples is a proven and successful way to help people break out of the cycle of poverty.  By providing these individuals, who are denied by banks and commercial loan agencies, with small loans and/or access to cash, PFD provides them with the means to start a business, invest in more and better food resources, pay for school fees, and afford healthcare.  PFD has been involved in Small-Enterprise Development and micro-loans since 2000 and has conducted these programs in Nigeria and Bosnia & Herzegovina with several success stories.

NIGERIA

In Nigeria, an estimated 35 million people live on less than $1 per day; income-generating options are few and unemployment is estimated to be over 15%; the average monthly income per household is less than $30. Poverty has many consequences, including low levels of education, limited access to factors of production, and severe health problems, including malnutrition which affects 32% of children. 

Nigeria's Credit Program

To address these problems and challenges, PFD increases access to credit for those unable to access credit through commercial agencies– either due to lack of collateral or because their credit needs are too small to be attractive to banking institutions.

PFD's credit programs primarily target women traders in Benue and Nassarawa states and recently in Bauchi. The credit program is being implemented through 15 local NGOs with PFD providing these partners with loan capital and operational funding for the first 24 months. As the local NGO matures, PFD gradually withdraws operational funding and the NGO sustains its operation with income generated from the revolving loan fund. Throughout the partnership, PFD provides intensive capacity building and close monitoring and evaluation.

Micro-Credit and Health

As with many of its programs, PFD has integrated the micro-loan scheme with health education components.  Loan groups and their regular meetings are used as venues for facilitators to communicate health information and education. 

Reproductive health is particularly emphasized as 90% of the programs 35,000 borrowers are women.  These women use their loans to expand agricultural production or processing as well as trading activities.  Increased household income helps households improve their living conditions, including health and education opportunities.

BUSINESS DEVELOPMENT SERVICES (BDS)

PFD is also implementing a business-development program to provide business development services to small and medium enterprises.  The goal of the program is to improve productivity, sales, and profit, therefore increasing employment opportunitise for agricultural producers and processors.  Within three months of the program's implementation, PFD trained over 170 small enterprises, roughly 50% of the annual target population.

BOSNIA & HERZEGOVINA

In Bosnia & Herzegovina, a key component of PFD’s Integrated Agricultural Development Program has been the establishment of a commercial credit program through which members of the PFD-supported Independent Farmers’ Association (IFA) can access agricultural loans administered by UPI Bank, a national commercial banking entity.

IFA credit activities are working in conjunction with PFD’s other efforts to increase farmers’ access to agricultural marketing opportunities and information. Credit follows training and capacity-building  as a means for farmers to put lessons and theories into practice by investing in new techniques and equipment. Credit also enables small-scale farmers to participate in PFD supported agricultural activities such as joint procurements and buy-off stations.  Overall, more than 1,300 beneficiaries were provided with micro-loans.

RASPBERRY CULTIVATION

In 2003, in response to the IFA credit program, UPI Bank opened a branch office in the Bugojno municipality, where the IFA is based, and set up two credit lines, one to be used for joint procurements of agricultural inputs and the other, an open credit line for agricultural activities.  Through its partnership with UPI Bank, PFD provided agricultural micro-credit to support raspberry cultivation.  The farmer beficiaries harvested 130 metric tons of raspberries and received an average price of $2.50 per kilo, or over $325,000 for the whole harvest.

Through its activities, PFD made significant contributions to strenghthening local and private agricultural entities in its direct support for farmers, formation of associations, partnerships with local agencies, and its commitment to capacity building and sustainable benefits.

Faces of Impact: Micro-Credit

Helen Dauda is a widow.  Prior to receiving a small loan in the PFD program she had little income.  She was responsible for paying her children's school fees, feeding them and making sure they got the medicine they needed.  "The loan was life saving."  She now runs her own business processing soybeans and worries less about her income.

Monika Luka is a farmer.  Thanks to the loan she received she has the opportunity to better plan her crop and expand her farm. Ms. Luka now believes that her farm will produce more than in previous years.

Talata Kassa is the newest member of a loan group.  She not only has to take care of herself but also her aging parents and young siblings.  Thanks to the loan and training, her business of selling cooked fish has grown.  She says the additional income "has filled her life with blessings".

 Hanato Yorhanna was one of the first in her village to receive a loan.  It has allowed her to diversify.  She went from being a food vendor to a "complete business woman" who farms, processes and sells her products.  Before her pre-loan training she had few skills.  Now she is proud to expand her business.

To read more PFD Success Stories, visit the Stories page