Agricultural Financial Services Project

Place: macedonia, Europe
Sustainable development of small rural communities Sustainable development of small rural communities
Total Budget: € 0,00 | Period: From June 2004 To June 2008


The project focuses on the family farm as the core unit of enterprise in the emerging market-oriented rural economy, but its impact extends to poor unemployed people who do not have access to agricultural assets.


The International Fund for Agricultural Development (IFAD) - Italy

Lead applicant

The International Fund for Agricultural Development (IFAD), a specialized agency of the United Nations, was established as an international financial institution in 1977 as one of the major outcomes of the 1974 World Food Conference. The conference was organized in response to the food crises of the early 1970s that primarily affected the Sahelian countries of Africa. It resolved that "an International Fund for Agricultural Development should be established immediately to finance agricultural development projects primarily for food production in the developing countries." Working with poor rural people, governments, donors, non-governmental organizations and many other partners, IFAD focuses on country-specific solutions, which can involve increasing poor rural people's access to financial services, markets, technology, land and other natural resources.

Ministry of Agriculture, Forestry and Water Economy-R. Macedonia - Macedonia

Initiative partner

Ministry of Agriculture, Forestry and Water Supply performs activities related to: - Agriculture, forestry and water management; - Use of agricultural land, forests and other natural resources; - Hunting and fishing; - The protection of animals and plants from pests and diseases; - Monitoring and study of water conditions, maintenance and improvement of the water regime; - Hydromeliorative systems; - Agro-meteorological and hydrological measurements, as well as anti-protection; - Study and research of the meteorological, hydrological and bio-processes and phenomena; - Supervision of its authority and - Performs other duties prescribed by law.

Swedish International Development Agency - Sweden

Initiative partner

Sida is a government agency working on behalf of the Swedish parliament and government, with the mission to reduce poverty in the world. Through our work and in cooperation with others, we contribute to implementing Sweden’s Policy for Global Development (PGU).

With the overarching goal of accession to the European Union (EU), Government efforts to effect the transition from a command to a market economy in Macedonia continue to acknowledge the importance of promoting private sector growth as the key element for job creation and poverty reduction. The Agricultural Financial Services Project (AFSP) was designed in 2000 as a national project to further the development of commercially viable financial and agricultural services over a 5-year period. It was geared, among other things, to the establishment of a long-term linkage of farming and other rural businesses to the formal financial sector, as well as enhanced access to domestic, regional and other European export markets through agricultural product standards increasingly convergent with those of the EU.

The main project inovation was the establishment of the sustainable cooperation and interaction between the farmers and financial institution in the country. For that reason advisory service was developed which play as a moderator between the farmers and loan providers (financial institutions).

The project focuses on the family farm as the core unit of enterprise in the emerging market-oriented rural economy, but its impact extends to poor unemployed people who do not have access to agricultural assets.

The project’s three inter-related objectives are to:
increase financial support for agriculture on a sustainable basis
upgrade the technical and managerial skills of rural poor people in the target group
build the capacity of technical and financial service providers to address the needs of their clients in the agricultural sector

To respond to the need for rural financial services, the project established an Agricultural Credit Discount Fund (ACDF). Through the ACDF the project provides funds on which formal financial institutions licensed by the National Bank of Macedonia can draw for lending to qualifying borrowers. The ACDF administers the incremental and revolving credit fund, manages the refinancing process, verifies loan eligibility for refinancing, monitors loan utilization and organizes capacity-building activities for private financial institutions.

The Project achieved its objectives in a very satisfactory manner. As had been hoped at appraisal, associated investments had a major catalytic effect on financial institutions and the nature and extent of smallholders’ and other rural businesses’ links with the formal financial sector, as well as on the productivity and profitability of the businesses supported by the loans. Project outcomes will continue to benefit the target population well beyond the project period. Key direct and induced effects include:

- adjustments in the policies and financing arrangements of commercial financial institutions, resulting in their expanded outreach and increased levels of rurally-based business;

- enhanced competition in rural commercial lending leading to reduced interest rates, improved and diversified access to financial services in rural areas, an increasing diversification of available loan products and quicker response times to loan applications due to the expanded branch network and increased autonomy in decision-making at branch level;

- mobilisation of additional resources in excess of EUR 40 million into the ACDF refinancing scheme from World Bank and European Investment Bank sources, further securing the operation of the scheme in the short- to medium-term;

- a major contribution to the development of pluralistic advisory services through the actions of agricultural/business development advisors and their establishment of eight commercially viable, private consulting companies. The companies now offer an increasingly diverse range of advisory services to individual and corporate clients (including primary producers and smallholders, small- and medium-scale rural entrepreneurs) and provide valued links between commercial financial institutions and their clients in rural areas;

- strengthened marketing linkages in priority agricultural value chains through which additional marketing opportunities have been secured, business turnover and profitability increased and additional jobs created among the target population. The supply chain management approach, the appreciation of interrelationships between value chain participants and the implications throughout the chains of market demands regarding quality, hygiene and safety standards are now fully embedded in the work of the consultants; and    

- an improved basis for investors to access grants from EU-IPARD funds, which are expected to come on stream from January 2009. The ACDF anticipates that PFIs will receive many more applications for loans to support investment in new and upgraded rural businesses eligible for IPARD grants and accordingly will continue to seek refinancing from ACDF’s now much expanded resources. Both individual and corporate clients may be expected to benefit, although the latter may find it easier to meet IPARD grant criteria. 

The project beneficiaries were Macedonian small scale farmers.

- 7 people on the managerial position (agro-economists and agronomists)

- 14 on field advisors (agro-economists and agronomists)

Lidija Cadikovska (Manager)

- low awareness and flexibility of the financial institutions at the begining of the project implementation

- low borrowers (farmers) financial capacity for fulfillment of the banks' eligibility criteraria 

- The orginized trainings and education activities were focused on the promotion of the contemporary Good agricultural practices

- The established 9 private consulting (advisory) companies ensured sustainablity and of the activites after the project completition

- The idea was promoted and considered as a valuable for other countries with similar socio-economic conditions (Armenia, Georgia, Albania, Serbia, Bosnia & Herzegovina). 

- The results, approaches and project achivments were promoted by the IFAD's regular communication channels