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Financing Agriculture : Kampala Principles

Financial inclusion is a key to achieving MDGs and to Africa’s development. The MFW4A Conference held in Uganda in June 2011 recognised that while Agricultural Finance is a part of the overall financial system of a country, the financial services needs of Agriculture Sectors in Africa are pressing, and demand special attention. The Principles set out below are intended to suggest actions to give effect to this objective.

  • Address Agricultural Finance policy strengthening through establishing a specific high-level coordination body and by recognising a single entity as the advocate for Agricultural Finance.
  • Strengthen farmers’ organizations so that the production end of agricultural value chains becomes an effective influence on agricultural finance policy making.
  • Focus public sector policy on a value chain/commodity approach, with clustering of smaller farmers to facilitate economies of scale in input purchase, value addition, marketing and advisory services.
  • Ensure legislation is in place and is implemented to foster innovation and to remove barriers to financing the business of agriculture, through measures such as, but not limited to: asset-backed products, warehouse receipts, contract farming, credit reference bureaux (and better client identification), consolidation of small but viable rural financial institutions and other support to the informal financial sector.
  • In accordance with CAADP Principles, and in encouragement of private sector investment, increase public sector expenditure in areas such as, but not limited to: crop and livestock research and extension, water for irrigated crop production and livestock farming, infrastructure for crop insurance, rural energy supply, communications and roads.
  • Support transformation of the agricultural sector through encouragement of longer term productivity-enhancing, on-farm investments such as water supply/irrigation, fencing and farm buildings, through consensual approaches to land tenure issues.
  • Enable financial institutions to meet the demand for longer term financing by developing financial markets so that lenders can gain access to the term liabilities required.
  • Encourage the commercialisation of agriculture and of farming as a business, whether by consolidation of small holdings or through involvement of the private sector (domestic and foreign); in both cases ensure that social, cultural and environmental concerns are met and ,in the latter case, that appropriate controls are in place to prevent undesirable exploitation.
  • Develop and implement concrete actions to improve financial literacy, consumer protection and farmer business education, with a special focus on gender and youth issues.
  • Drive research, training and dissemination of knowledge to foster private sector investment in developing and marketing added-value agricultural products and services.
  • Ensure a sustainable flow of information is available in areas such as, but not limited to: markets, output prices, costs of inputs and cost and conditions of financial products and services.

Please click here to download the Kampala Principles as a pdf file.

Source : www.mfw4a.org

Crédits: AK-Project