Iv. Liberia's Rural Finance and Agricultural Marketing
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IV. LIBERIA’S RURAL FINANCE AND AGRICULTURAL MARKETING SUB-SECTORS By Chet Aeschliman, FAO–RAF Rural Finance and Marketing Officer with contributions from Alfonso J. Wesseh, National Rural Finance and Marketing, Consultant, FAO Liberia 2007 IV. Liberia’s rural finance and agricultural marketing sub-sectors 142 CAAS-Lib Sub-Sector Reports Volume 2.2 ACRONYMS ACDB Agricultural Cooperative Development Bank of Liberia ACDI Agricultural Cooperative Development International of the United States ADB African Development Bank AFRACA African Rural & Agricultural Credit Association The United States Government’s "African Growth & Opportunity Act" programme AGOA to promote African exports to the USA BIVAC A private firm certifying the quality of exports from Liberia BNF Bureau of National Fisheries CARE Cooperative for American Relief Everywhere, an international NGO CARI Central Agricultural Research Institute of Liberia (Gbarnga, Bong Country) CBL Central Bank of Liberia CBO Community-based organizations CDA Cooperative Development Authority CLUSA Cooperative League of the United States CRS Catholic Relief Services, an international NGO CU Credit union, i.e. a savings and credit cooperative or association EAC A Liberian company formerly owning part of the LBDI ECOWAS The Economic Community of West African States EU European Union FAO Food and Agriculture Organization of the United Nations FAOR The FAO Representative or the entire Representation in Liberia FFA Farmers’ field school FX Foreign exchange GOL Government of Liberia IAS International Associated Services, a farm inputs and supply dealer in Monrovia IDPs Internally displaced persons IFAD International Fund for Agricultural Development of the United Nations IFDC International Centre for Soil Fertility and Agricultural Development ILO International Labour Organization of the United Nations IMF International Monetary Fund INGO International non-governmental organization LBDI Liberian Bank for Development and Investment LCUNA Liberia Credit Union National Association LEAP Local Enterprise Assistance Programme, a Liberian MFI LiMFU Liberia Marketing and Farmers Union LMA Liberia Marketing Association LoA Letter of agreement LPMC Liberia Produce Marketing Corporation LT Long-term LWS Lutheran World Service M&E Monitoring and evaluation MCI Ministry of Commerce and Industry MF Microfinance MFI Microfinance institution MIS Market information system OR management information system IFDC's Market Information Systems and Traders' Organizations Network and Project MISTOWA in West Africa IV. Liberia’s rural finance and agricultural marketing sub-sectors 143 CAAS-Lib Sub-Sector Reports Volume 2.2 MOA Ministry of Agriculture MOF Ministry of Finance MPEA Ministry of Planning and Economic Affairs NCBA National Cooperative Business Association (of the United States) NEPAD The African Union's New Programme for African Development NFC National Federation of Cooperatives NGO Non-governmental organization PSI Pre-shipment inspection RAF The FAO’s Regional Office for Africa, located in Accra, Ghana RF&MO RAF’s Rural Finance and Marketing Officer RO Reporting officer (i.e. the author of this document) The "Système Informatisé de Gestion des Opportunités d’Affaires" or "Trade SIGOA-TOPS Opportunities Management System" created by ECOWAS to promote intra-regional trade SPFS The FAO’s Special Programme for Food Security TA Technical Assistance TCP The FAO’s Technical Cooperation Programme, its internal project window UL University of Liberia UN The United Nations UNCDF The United Nations Capital Development Fund UNDP The United Nations Development Programme UNFPA The United Nations Fund for Population Affairs UNICEF The United Nations Information, Cultural and Education Foundation UNIDO The United Nations Industrial Development Organization UNMIL United Nations Mission in Liberia UNOPS United Nations Office for Project Services USAID The United States Agency for International Development WB The World Bank WOCCU World Council of Credit Unions, Inc. (United States) WTO The World Trade Organization WVI World Vision International, an international NGO IV. Liberia’s rural finance and agricultural marketing sub-sectors 144 CAAS-Lib Sub-Sector Reports Volume 2.2 IV. LIBERIA’S RURAL FINANCE AND AGRICULTURAL MARKETING SUB-SECTORS 1. INTRODUCTION This study was carried out jointly by Mr Chet Aeschliman, Rural Finance and Marketing Officer attached to the FAO's Regional Office for Africa located in Accra, Ghana, and Mr Alfonso Wesseh, Rural Finance and Marketing Consultant, based in Monrovia, Liberia. The study results have been derived from a review of relevant documentation (see the References in Annex 2 for a list of documents consulted) and interviews with several informed individuals from over a range of different organizations. These organizations included FAO staff, representatives of donors and other UN agencies, government ministries and agencies, local governments, various NGOs, farmers' cooperatives, farmers’ associations, marketing associations, banks, credit unions, microfinance institutions, and a number of independent consultants. A list of the team's principal interlocutors, along with their contact information, can be found in Annex 3. These interviews were carried out in Monrovia, as well as elsewhere in Monserrado County, and in Bomi, Bong, Grand Bassa, Margibi, Maryland and Nimba counties. The team planned to visit even more counties, especially Lofa County because of its position as Liberia's leading agricultural producer, as well as Grand Gedeh County, but ultimately could not because of the unavailability of transport and impassable rainy season roads in these two counties. During the course of their research, the consultants also consulted the FAOR's database of the various institutions involved in the agricultural sector, and started to build up additional databases of (1) farmer cooperatives and (2) larger commercial farms. Figure 1 IV. Liberia’s rural finance and agricultural marketing sub-sectors 145 CAAS-Lib Sub-Sector Reports Volume 2.2 The conclusions reached and presented in this report are those of the two consultants named above alone, and may not necessarily coincide with the views of other FAO colleagues or consultants. It is fair to say, however, that there is a wide consensus among those interviewed about the nature of the existing constraints, as well as on appropriate solutions (outlined below) to problems in the Liberian rural finance and agricultural produce marketing sub- sectors. 2. REVIEW OF PAST EXPERIENCES IN THE RURAL FINANCE AND MARKETING SUB -SECTORS Over the years, many individuals and organizations have been involved in the production, processing, storage, transportation, financing and marketing (including export) of Liberia’s agricultural produce. These include the producers and their organizations, produce buyers, banks, NGOs, GOL, marketing associations, input suppliers and other actors. While the role of each of these parties in the various value chains is discussed immediately below, their pre- war relationships are shown in the diagram on the following page. 2.1 Agricultural producers and farmer organizations These include thousands of individual smallholder farmers, currently estimated to number approximately 350 000 families. 1 These individual smallholder producers need access to farm input, working capital and seasonal loans along with medium- and long-term credit for investment in their farms, as well as savings, insurance and money transfer services. They have been greatly disadvantaged since the failure of the Agricultural Cooperative Development Bank (ACDB), formerly the economic motor of Liberia’s rural economy. The number, cohesiveness and effectiveness of the many formal and informal farmer associations existing before the civil war were also greatly reduced by the war, so that farmers are less likely to help each other than was the case in pre-war times. 2.2 Agricultural cooperative networks Prior to the war, there were approximately a hundred significant farmer marketing cooperatives and associations with approximately 75 000 members 2, and these operated relatively effectively compared to other African countries’ agricultural cooperatives, considering that most of other countries' cooperatives failed even without having to deal with a civil war. The following charts illustrate the approximate magnitude of known agricultural cooperatives in Liberia. Number of Non-Financial Cooperatives by Type and County Membership in Farmer Cooperatives by County 35 20.000 30 18.000 25 16.000 14.000 20 12.000 15 10.000 10 8.000 5 6.000 4.000 0 2.000 i g t a d a s e e m n n lu sa eh ru f n do b s e o o o u o s d K o la a m e G in B B o rp a e L y rr i C r S 0 M a B G nd r e N r e e b d d a a ts e iv p G n n r M n iv R i t e a ra a G o R ss e C G r M m un ofa e no G assa L ado Ce i Bo Bong B rr S Mo se Nimba e Gbarpolu iver Grand Kru Marylandont R River G Consumer Farmers Cooperatives Industrial Literacy Urban Multipurpose Cap GrandGrand Gedeh M Figure 2 1 FAO/WFP Crop and Food Security Assessment for Liberia, February 2006, p. 19. 2 Based largely on statistics provided by CDA and Mr John Willie of the NGO LIDS in Bong County. IV. Liberia’s rural finance and agricultural marketing sub-sectors 146 CAAS-Lib Sub-Sector Reports Volume 2.2 Simplified Pre-War Rural Finance & Smallholder Marketing Channels Buyers Abroad s Quality e i r Certification e v i l e D BIVAC Pre-Export Inspection of e c u (Certification) Produce d Produce o r P Large Expatriate- Produce