There is an alarming rate of global food insecurity specially third world countries, conceptually to fight and reduce food insecurity, agriculture is a vital tool, farming and rearing of animals comprises mainly in three dimensional factors, natural physical geography( water), be it the rain water or irrigated, fertile soil, secondly is the labor force, lastly is financial backup to farmers, in this context today I would like to talk about the determinate factor, which is a conceptual and theoretical framework of financial policies in the agricultural sector.
“it’s an eternal mistake to call Africa a poor continent but the most depressing reality is that many Africans think so”, the term credit unions is not widely used mostly in sub Sahara Africa, despite the existence of some premature forms developed by non¬-governmental organizations, most credit unions and co operate societies limit their services to members whose savings provide the financial basis for the lending operations, however African governments can benefit from the experience of India and china to support agricultural co-operatives where various credit co-operatives are organized in multi-leered structures and are used as a vehicle for channeling government and central bank funds to farmers co-operatives and to individuals. In northern Kenya where I come from there is a very tragic depletion of animal resources due to number of factors and mainly farmers luck financial assistance when there is famine and disease breakout, there is a form of localized money lenders which is known as “ayuuta” and this is a debt given by local money lenders, but it’s associated with much worse consequences if the farmer fails to repay the debt,
1: the farmer will lose his investment money
2: the labor he has put in the farm will be lost in the clear air
3: the framers will also lose his physical asset as a compensation for the debt. And eventually no famer will dare thus collapse of the whole sector.
for stiff and faster agricultural development to be reached and fight food insecurity in Africa, agricultural finance should be put in place, with respect to finance should emphasize on improving the efficiency and productivity of all credit unions and provided with a platform of borrowing money from banks in order to avail money to farmers, effectively solving the agricultural risk, policy planners should take into consideration both ex-ante and ex-post analysis of risks associated to agriculture in order to design appropriate gateway for the term loan process, this will include, careful selection and supervision of clients and feasibility appraisal of the investment, portfolio divertisification, risk base pricing, securing loan comprehended risk.
Abdishakur Hussein
Mursalabdishakur@yahoo.com