The Islamic Bank of Guinea in collaboration with the Office of the Prime Minister’s Delivery Unit recently launched an innovative financing product for agricultural inputs.
The Islamic financing product called “Mourabaha” is directed towards Pineapple Fruit Planters of the Lower Guinea (Federation), who subscribed to a new financing product known as BIG, offered by the Islamic Bank of Guinea.
This finance product will enable farmers to acquire fertilizer and irrigation material as part of a pooled procurement by the Federation.
Also, the product offers terms and conditions that are particularly advantageous, specifically a reimbursement calendar aligned with harvest dates (i.e. a grace period which can be extended to 18 months) and a preferential financial cost (a margin of 7.5% over 18 months for the fertilizer and a margin of 15% over 36 months for the irrigation material).
The new partnership between the BIG and the Federation is as a result of the pineapple value chain initiative being implemented by the DU and the Ministry of Agriculture. It addresses the working capital challenge that small producers face when trying to access inputs like fertilizer and irrigation kits – a challenge that was identified as one of the main barriers to increasing production and improving yields.
This Islamic finance product conceived for an organization of farmers should make it easier for the Guinean pineapple producers. For this first pilot phase, a group of planters in Kindia and Maferenyah have signed up to the financing mechanism.
The BIG and The Federation
“We want this pilot phase to have a ripple effect, to encourage other planters to join the mechanism and be supported by the Federation to grow quality fruit” commented Moussa Camara, President of the Federation, as he was receiving the cheque from the BIG for the purchase of fertilizer.
The DU and the Ministry of Agriculture who developed this financing mechanism and who support the Federation with the implementation, are working on the sustainability and expansion of this mechanism. Technical partners including the COLEACP, Winrock and CNFA have been mobilized to support the Federation in its activities of technical assistance to farmers and management of the credit cycle.
In total, the BIG has secured an envelope of close to 2 billion GNF to support the Federation. Aguibou Barry, the Head of the BIG branch in Kindia said: “We are very happy to have developed a good relationship with the Federation of Fruit Planters of Lower Guinea and we are planning to make this relationship mutually beneficial”.
The DU aims to accelerate the implementation of Government flagship initiatives through the development and incubation of effective, sustainable, and results-oriented implementation and governance approaches. The DU’s pilot projects are focused on agriculture, mining and leadership development. In the agriculture sector, the DU’s interventions, in collaboration with the Ministry of Agriculture and the Ministry of Commerce, focus on revitalizing the pineapple industry and on supporting Guinea in reclaiming its leadership position in international markets. The priority interventions are:
Land preparation: support land extension, preparation and irrigation in order to nearly double land dedicated to pineapple production by 2020, from 350 to 650 hectares
Access to fertilizers: improve access to and use of fertilizers to increase yield by 70% by 2020, from 30 metric tonnes per hectare to 50
Encourage the production of 2,500 metric tonnes of pineapples for export by 2020
Encourage the processing of pineapples at both artisanal and industrial scale
About the Delivery Unit of the Office of the Prime Minister
The Delivery Unit of the Office of the Prime Minister aims to achieve national agendas to boost the Guinean economy primarily in the agriculture and mining sectors. The Unit is also focused on strengthening governance and developing the next generation of Guinean leadership. The DU is financed by the Abu Dhabi Fund for Development (ADFD) and the Government of Guinea.