Do you believe that governments should make efforts to promote migrants’ and returnees’ investments in agribusinesses in rural areas with high labour out-migration rates? What should be the role of other stakeholders (NGOs, academia, international organizations, donors, etc.) in promoting such investments?
Despite the inherent ramification and complications within the framework of such financing especially in Africa, I still believe if well-coordinated its effect could be extremely relevant in the current African Agricultural environment. One thing that remains recurrent in these systems is the presence of multiple causations which prevents the capability to function of most rural smallholders. In context these causations are in the form of basic infrastructure amenities which are required to encourage production and notwithstanding the unavailability of operational finances which is needed for both expansionary and to maintain current production capacity. Intrinsically the aforementioned challenges extend from basic infrastructure to availability of financial solutions which can assist these farmers transcend from smallholders to medium size farm operators. Among the ills of such a system of challenges the most deleterious effect remains the chain effect it has on investors willing to invest in African Agribusiness. I believe that Matching grant programmes provide a perfect complimentary funding source to current government within the agribusiness sector as it could fill in where government fail especially if they are preferably used in the development of infrastructure, preliminary services and frameworks like warehouses, cold stores, preliminary decentralized processing units which can convert highly perishable farm produce into semi-finished less perishable agricultural produce. The investment require in order to make agricultural agribusinesses self-sustaining is Himalayan and cannot be accomplished only by any government single handily. Furthermore, the value of migrant and returnees’ remains capital especially within such a global era given that taste and preferences have all mixed; there is massive need for farmers of the south to get educated on current world trends within markets. Without such investments, farmers might continue being less profitable though being productive within their farm holding thus rendering them stagnant within the vicious poverty cycle. In my opinion for the sake of a unified goal [creating a self-sustaining African Agribusiness framework] all the aforementioned stakeholders need to constitute more of a multi-stakeholder taskforce which will enable a proper understanding of the realities on the ground as expressed from academic and NGO stand point. At the bases in Cameroon, it is evident that most local NGO’s remain the task forces on the ground for implementation of most projects and thus implying they have the best image of the realities of the rural people. On the other hand, academics ought to create awareness to both donors and international organizations of the well appraised realities partly appraised and complemented by those from NGOs. Departing from this reasoning point, it is evident that for an effective program these stakeholders must think of forming more multi-stakeholder working environment. With this in place, finances no matter how small will become more effective and more sustainable as it is deployed objectively and its outcome shall be more impactful. In resume this means of funding could be both a blessing and a curse depending on the implementation mode employed within rural communities
According to you, what are the pros and cons of matching grant programmes? What should be taken into consideration for their promotion and deployment?
Matching grants are typically used to finance social and economic infrastructure, productive assets and income generating and livelihood-diversification activities by groups, and sometimes by individuals. Within rural and agricultural business development projects, they are used to develop agricultural value chains, promote innovation and technology, enhance access to extension and support services, and support farm diversification. They can be classified by purpose (type of goods and services financed), by the public or private nature of these goods and services, by type of recipient, by allocation mechanism and by type of resources provided Promoting non-viable or non-feasible enterprises or business activities • Substituting savings with external grants • Crowding out financial institutions • Crowding out private investment • Misallocating scarce resources • Supporting asset creation among groups of people, instead of individuals, which may lead to lack of care and maintenance of the assets received or failure to achieve satisfactory levels of profit.
What other models or approaches would you recommend to promote the investment of remittances in agriculture and agribusinesses? Do you think these are preferable over matching grant programmes, and if so, why?
Personally I will subscribe to a more controlled approach for remittances given that without any necessary control or overseeing body, it becomes very difficult to identify the right actors who may yield potentially more impact within communities or communities with higher impact. In most cases returnees in Cameroon face a major stumbling block at the level of finding to only the right project to invest in but also the right person to confer such project to. From these bases it becomes wise to channel such funding into structuring/ reorganizing vital services like financial, extension services and other support systems that will enable returnees the liaise remittance funding to national financial institutions and banks who can provide the appropriate follow-ups and can best choose the most impactful project. At the moment within the Agricultural ecosystem in General, 80% of the loans are mostly operational finance with little available for capital investment and asset accumulation oif which raising asset accumulation directly makes operators more eligible to bigger loans and to access more opportunities to grow their business. With such a synergy, it becomes essential for banks to use such remittance funding to create new products which will provide investment capital and infrastructure backed loans given that their operational finances are some worth not at risk. With this in place, agribusiness operators will get the ability not only to adopt the right machinery but also they will be raising their asset levels thus making them eligible for future loans of bigger values. Furthermore, it this approach reduces the risk of fatal loses in the process and utter discouragement from these returnees who seek to do justice to their home land but every now and then get embarrassed by mistrust and theft. I bet with a process like this, the impact shall be felt and the ripple effect shall translate to all other returnees. In special cases, these groups can decide to become partners within such financial institutions so as to facilitate their reintegration into their home land. And in other cases, they might get to integrate their know how in refining current existing products and services within agribusiness lines given that most funding happening in Cameroon this days rarely materializes without a training program to enable a swifter adaptation.
Do you know about matching grant programmes - meeting the inclusion criteria outlined below - that have been implemented to channelize remittances into agribusiness development? If yes, please provide the name and country where the programme was implemented and sources of complementary information, such as studies, mid-term or impact evaluations, links to relevant websites, etc.
Integrating matching grants and bank lending: The case of the Rural Enterprise Programme in Ghana sponsored by IFAD was reported to be a huge success.
Rural Investment Facility 2 is a grant programme under the Rwandan Ministry of Agriculture and Animal Resources, originally administered by the National Bank of Rwanda and later transferred to a specialized fund manager. By mid-2011, fund management was transferred to a subsidiary of a government-owned development bank that took over the management of most grant and guarantee programmes in Rwanda. You can find out of the facility, terms and conditions see: http://amis.minagri.gov.rw/content/rural-investment-facility-rif-2 and http://www.bdf.rw/matching_grant.php
M. Perez Lionnel Kemeni Kambiet