This is the speech delivered by the Central Bank of the Gambia’s Director of Development Finance, Madam Fatou Deen Touray on behalf of the Governor of Central Bank, Mr Buah Saidy. Speaking at a High-Level Breakfast meeting organised by the Gambia Chamber of Commerce and Industry (GCCI), Madam Fatou Deen Touray deliberated on some of the financing opportunities that exist in financing agriculture.
Present at the High-Level Roundtable Breakfast meeting held at Coco Ocean on 20th July 2022 are the representatives from ROOTS, the Deputy Permanent Secretary of the Ministry of Agriculture and other experts from the Finance Sector.
Below is the speech delivered by Madam Fatou Deen Touray, Director of Development Finance as sent to Gainako Online Newspaper.
My name is Fatou Deen-Touray and I am the Director of the Development Finance Department of the Central Bank of the Gambia. Allow me to extend the regards and apologies of the Honorable Governor Buah Saidy who is unable to be at this august meeting due to an equally important national engagement and has asked me to deputize on his behalf.
Ladies and gentlemen, this national initiative particularly as it deals with ways and means of developing our agricultural sector and specifically through the 4Ps of the flagship ROOTS Project could not have come at an opportune time as we experienced one of the most destabilizing moments of our time which calls for serious re-thinking of our development priorities.
Ladies and gentlemen, the Bank as the custodian of the financial system will in partnership with stakeholders take the lead role in creating favorable conditions to facilitate access to finance to most of our population engaged in the real sector, in agriculture and SMEs; dominated by women, youth, small farmers and other vulnerable groups. They are within the highest excluded segment of society from access to formal financial services. In this scenario, the Bank recognizes the need to develop both supply and demand side conditions to encourage lending while ensuring risks are well mitigated for financial service providers specifically in ensuring returns to their investments to support these vulnerable sectors. Hence the appropriate supportive policies and regulations will be continuously considered in creating an enabling financial environment to ensure inclusive finance and economic growth.
Ladies and Gentlemen, the country’s economic challenges continue to include high inflation primarily driven by high food prices where food constitutes half of the consumer basket as well as the bulk of imports. This invariably exerts a significant toll on purchasing powers, lives and livelihoods, with huge risks to food security.
Ladies and gentlemen, recent global challenges such as the COVID-19 pandemic and the war in Ukraine have also exacerbated food insecurity around the world and a poor country like the Gambia is not an exception. These destabilizing tendencies to the economy make it necessary for the us to rethink our development priorities particularly agriculture, food self-sufficiency and security. In this initiative, we must mainstream the most vulnerable including women and youth and creating viable economic engagements that empowers them to increase their welfare and contribute to growth and development.
For this reason, the Bank has recently embarked on a restructuring exercise in which it created the Development Finance Department with a focus to strengthen its development support to the real sector, mostly through public-private partnerships with stakeholders in the economy.
Ladies and gentlemen, the Bank’s development activities for agriculture goes beyond the partnership in the ROOTS Project in terms of providing a Matching Grant for the rice value chain in the ROOTS 4Ps arrangement. The Bank is to provide the 20% matching grant to the 240 youth rice producers estimated at D19 million which the Bank is willing to scale up to 500 beneficiaries estimated at D40 million if it can be accommodated by the project design. The Bank is also in view of supporting the project’s horticulture component in 2023. An MOU is in development to provide agreement between the two parties on the details of the partnership. The Bank is also engaged in a similar partnership with the GIRAV Project.
Ladies and gentlemen, in January of this year, the Bank launched the NFIS to provide a road map to increase access to finance to the 70% of the 1.33 million adult population by 2025, noting the 19% and extremely low level of financial inclusion of the Gambia (Finscope Survey 2019). Financial inclusion is complementary to economic inclusion. One reason to tie financial inclusion to economic development is in recognition of the fact that certain sectors of the economy such as agriculture and small businesses, are critical to growth and development, but remain severely underfunded and underdeveloped. A large segment of the population cannot realize their full productive potential due to lack of access to finance. Furthermore, commercialization and industrial development are key levers to economic growth and crucial to our move away from subsistent agriculture. The NFIS has created specific focus on agricultural and rural finance as a working group.
Ladies and Gentlemen, the DFD, has commenced significant work in its developmental mandate, starting with the establishment of mechanisms to de-risk and encourage private sector lending to agriculture and tourism SMEs. The scheme supported by UNCDF has kicked off with a Pilot Project of US$200,000 which because of its limited size can only cater to few participating institutions warranting the current exclusion of banks and participation of only three finance companies (Reliance, Supersonicz, Bayba). However, the Scheme’s design is futuristic enough to integrate more participants including commercial banks as and when the fund is large enough to do so. For this reason, other development partners are being encouraged to subscribe to the Scheme.
Ladies and Gentlemen, the CGS is a viable complement to the Gambia Incentive Based Risk Sharing Facility for Agricultural Lending (GAMIRSAL) which is a collaborative effort between the CBG and Ministry of Agriculture with assistance from the African Development Bank to de-risk agricultural lending.
Recently, the CBG with support from AFI’s In-country Implementation Grant of US$87,000 embarked on the formulation of gender-inclusive finance activities including digital financial services, digital financial literacy, and gender disaggregated remittances. The project also includes formulating a gender inclusive consumer protection framework that would complement the Gambia Competition and Consumer Protection Commission’s (GCCPC) efforts, to ensure protection for the most vulnerable sectors of society that is not discriminatory/exploitative of women, youth, and rural dwellers.
Distinguished ladies and gentlemen, the CBG is in consultation with other stakeholders including the Ministry of Gender and the Ministry of Youth and Sports to find ways of supporting women and youth access to finance through Women Enterprise Fund (WEF) and Gambia Women’s Finance Association (GAWFA) by providing support to build their capacities to efficiently operationalize funding for SMEs and women groups.
Distinguished guests, ladies and gentlemen, a major barrier to financial inclusion is the mismatch between bank lending and agricultural credit requirements. The Bank in collaboration with stakeholders is well advanced in setting up a capital market which is expected to provide access to long-term funding for investments in agriculture and industrial purposes.
Further to this, the CBG in collaboration with partners, will support sectors of the economy that are targeted to fast-track food self-sufficiency and security including rice, maize value chains, horticulture, poultry, small ruminants, and fisheries. Interventions in these areas will call for significant investment in rehabilitation existing infrastructure across the country to support post-harvest activities including storage, processing, and packaging along the various value chains particularly with a view to reducing post-harvest losses in agriculture and ensuring value-addition to production. Leveraging on existing infrastructure including rural agricultural seed stores the Bank will support warehousing which provide viable storage facilities as well as warehouse receipts to substitute for collateral for borrowing from financial institutions.
Distinguished ladies and gentlemen, the Bank will place focus on supporting activities that mitigate climate change impact on the economy. Support for inclusive green finance activities for women and youth should lead to access to green finance and global climate change funds. Collaboration with relevant Ministries to rehabilitate weather forecasting facilities across the country to provide better weather data to aid water levels projections for agriculture especially in the rice fields.
Further to this, works have commenced in exploring sustainable and affordable sources of fertilizer supply for farmers who are usually constraint by high prices, limited supplies and untimely access and application thus leading to low productivity.
In line with supporting the agricultural sector, the Bank in partnership with private farmers is working through technical cooperation with academia including the University of the Gambia and University of Georgia, Athens to ensure increase in output/yields of the groundnut sub-sector through the adoption of new seed varieties that are high yielding and pest and disease resistant. Research and development will be fully supported for greater productivity and export capacity as well as value addition in various aspects of the groundnut value chain.
Distinguish guests, ladies and gentlemen, lending by financial institutions to the agriculture sector remains very low. This is because of the perceived risks associated with agricultural lending. In the drive to stimulate agricultural production and food self-sufficiency, the CBG is exploring possibilities of establishing an Agriculture and Industrial Development Bank (AIDB) that would cater to agricultural lending. The Concept Note with an estimated capital outlay of D1.0 billion for establishment of the AIDB, has already been drafted and approved in principle by the Board of Directors of the Bank. Successful implementation of the proposed bank would significantly increase lending to agriculture and small businesses
The Bank is assessing investment through partnership with private investors and public enterprises for the development of an Economic and Industrial Free Zone which is expected to increase the Gambia’s economical and regional trade and industrialization position. This facilitate opening up of markets for producers, and related value chain actors in agriculture and other economic sectors. A Concept Note has been developed and preliminary discussions with relevant partners and stakeholders is on course.
Finally at the grassroots level, the CBG is working with technical support partners including AFI to revitalize the community and village based VISACAs that are exclusively women owned and managed. The project is among other gender inclusive finance outputs funded by AFI in a US$87,000 support and will pilot some 20 VISACAs which already have the requisite infrastructure in place as well as potential for viability.
Ladies and gentlemen.
In conclusion, I call upon all stakeholders to collaborate in this noble initiative to pull our people out of poverty and hopelessness as a fundamental and human right. I would like to reiterate our commitment to working with all stakeholders in the interest of supporting them to have access to finance, build assets and wealth, improve their financial wellbeing and become economically empowered to contribute to development,.
I thank you all for your attention.
Hon, Buah D Saidy
Central Bank Governor