Rural Community Development Program in Nigeria through Agricultural Productivity Training and Microfinance for Access to Markets
Over 80% of the world’s poorest people still live in remote rural areas, far from markets where they can sell what they produce from the land. From 2000 – 2010, PfD led a major rural community development program across rural parts of Benue, Bauchi, Nassarawa, Kaduna, and Edo states. With support from the USDA and the Pitcairn Foundation, the program improved rural families’ access to markets through a combination of infrastructure improvements and microfinance services. In the first year alone, the program issued $350,000 in microloans (mainly to women) and paved seven major roads—providing market access to 225,000 people in remote, rural communities.
This was the logic: Technical trainings in agricultural production and processing would help farmers produce better; better access to markets would give them better income and a reason to expand their production; and microfinance would give them the capital to expand. This would not only benefit rural households economically, but create more robust and stable rural economies, and improve financial inclusion among some of Nigeria’s most hard-to-reach populations.
Banks are often unwilling to provide loans to farmers for two major reasons: first, without crop insurance, a farmer’s ability to repay even a small loan could be devastated by the loss of an entire crop due to any number of natural hazards; second, banks usually expect repayment to begin in less time than it takes to grow, harvest, and sell most crops. To correct this problem, PfD collaborated with its local microfinance partners to develop two agricultural loan products—an agricultural production loan and an agricultural processing loan—and trained local microfinance institutions (MFIs) to help them them minimize the risks associated with providing credit for agricultural activities.