A new preferential agricultural lending scheme has been launched through the Financing the Agriculture Sector in Armenia program. The scheme is being implemented by the German-Armenian Fund and was developed in collaboration with the German Development Bank (KfW) with the assistance of Swiss-based consultancy Business and Finance Consulting (BFC). The agro-lending scheme employs innovative “tripartite” value chain financing, in which lenders become full financial partners across the value chain. FINCA Armenia—a microfinance institution—and ArtAgro—an agro-services company with activities across the agricultural value chain—are participating in the pilot scheme.
Beneficiaries receive between AMD 75,000–1,500,000 at nil or close to nil interest rates, with a service fee of 3%. Loan maturity will be 6–12 months. Loan terms do not require a visit to the applicant’s property and loans of up to AMD 750,000 do not require references. Investment loans must not exceed AMD 75 million, with minimum maturity of 2 years, while working capital loans are capped at AMD 33 million, with minimum maturity of 8 months. The scheme allows farmers to select preferential credit tailored to their needs, said BFC Managing Director Michael Kortenbusch.
Innovative Value Chain Agro-Lending Scheme (In Russian)
By Michael Kortenbusch, BFC Managing Director
Yerevan, March 9, 2016