International Finance Corporation (IFC), a member of the World Bank Group, and the microfinance institution Agency for Finance in Kosovo (AFK) have announced a joint effort to support Kosovo’s agriculture sector by boosting lending to farmers.
IFC will advise AFK on lending tools and strategies while supporting training sessions to help farmers better understand financial instruments and present their business plans to creditors.
“Those efforts are considered key in Kosovo, where farmers are a key part of the economy but often [struggle] to access the financing they need to expand their businesses,” IFC said in a statement.
IFC helps financial institutions reach out to smallholder farmers, supporting innovations in the sector to spur job creation while aiming to attract private sector participation in the development of infrastructure projects.
“We are hoping to unlock the potential of investments in agriculture sector as a critical point for driving economic growth in Kosovo,” said Vahdet Anadolli, CEO of AFK. “We will continue to develop our agri-lending to help our clients by providing customised working capital and access to finance for different stakeholders along sustainable supply chains.”
Agriculture was the third largest contributor to Kosovo’s GDP in 2014, representing 11.4 percent of total GDP, according to the Kosovo Agency of Statistics. It is also a main source of exports, having generated roughly €35 million in revenue for the local economy the previous year.
But 60 percent of Kosovo’s population is rural and mostly poor, according to the US Agency for International Development (USAID); and inefficient, near-subsistence farming is common due to small plots of land, limited access to new technologies and innovations, as well as a broad lack of expertise.
“Challenges to be faced and circumstances to be overcome include limited access to credit and markets, inadequate greenhouse facilities, weak ‘farm-to-fork’ value added linkages, and poor quality farm inputs (seeds, fertilisers, and pesticides) and food safety infrastructures,” USAID outlined in a report addressing development strategies through 2018.
Since Kosovo became a member and shareholder of IFC in 2009, the organisation has invested and mobilised $391 million in the country through five projects across a variety of sectors.
The latest effort is part of the IFC ECA Agri-Finance Project, which facilitates access to finance for the agricultural sector in Ukraine, Central Asia, Azerbaijan, and the Western Balkans.
It is being spearheaded by IFC Europe and the Central Asia Agri-Finance Project, which receives support from the Austrian Ministry of Finance and the Hungarian Export-Import Bank.
IFC declined to comment further.