Over 50,000 vulnerable rural households in Togo will benefit from a US$35 million project that aims to spur inclusive rural economic growth and create employment opportunities in rural areas through a value chains approach, according to the details of a financing agreement signed today by government of Togo and the International Fund for Agricultural Development (IFAD).
The financing agreement for the Shared-risk Agricultural Financing Incentive Mechanism Support project (ProMIFA) was signed in Lomé by Lisandro Martin, Regional Director for West and Central Africa Division of IFAD and, Sani Yaya, Minister of Economy and Finance of the Republic of Togo.
The financing includes a $3.7 million loan and $3.7 million grant from IFAD. It will be cofinanced by private sector financial institutions ($6.3 million), the Government of Togo ($3.8 million), and the beneficiaries themselves ($1.8 million). The financing gap of $15.6 million will be covered by other sources of financing or by the IFAD resource allocation cycle for Togo for the period 2019-2021.
The agriculture sector is the backbone of the economy of Togo. It provides 60 per cent of employment and contributes 41 per cent of GDP. The new project will first develop production and marketing of rice, market gardening, maize and poultry, in order to improve the food and nutritional security of rural communities.
“Although the agriculture sector remains the main employer for young people, especially women in Togo, the financial sector operators hesitate to provide them with credit,” said Martin. “ProMIFA will facilitate sustainable access to financial services tailored to smallholder farmers and micro, small and medium-sized agricultural enterprises so they can develop their activities and gain access to markets.”
ProMIFA aims to create jobs and generate income for rural people living in the project areas, and to ensure that at least 30 per cent of the project’s participants are women and 40 per cent are young people. It will help facilitate access to financial services for rural communities by increasing loans to smallholder farmers and to small and medium-sized rural enterprises, while also improving financial literacy.
The project will support the establishment of a financing and risk-mitigation mechanism, develop new financial products and improve the quality of financial services. ProMIFA will also provide training to financial institutions to enable them to assist smallholders in drafting business plans and provide them with financial products that meet their needs.
Since 1983, IFAD has financed eight rural development programmes and projects in Togo at a total cost of $252.5 million, with an IFAD investment of $94.8 million. These projects and programmes have directly benefited nearly 320,000 rural households.