New Directions for Agricultural Credit

ILOP Update, 13 September 1996

In order to increase the amount of credit available to farmers, particularly Haiti's many peasants struggling at the edge of survival, the Office of Agricultural Credit (BCA) of the Ministry of Agriculture has adopted a new direction of disbursing credit through a number of non-governmental organizations (NGOs) with credit programs in the countryside. Haiti's formal banking system has traditionally been closed to all but a small group of wealthy Haitians. There are few bank branches outside of Port-au- Prince, and in 1994 approximately 64% of all credit went to just 83 large-scale borrowers, while only 1.27% of all lending went to the agricultural sector. Completely excluded from the credit system, small-scale farmers needing loans for seeds and other agricultural inputs have traditionally been forced to rely on informal lenders, usually charging extortionary interest rates of 240 - 600% per year. This of course has led to further impoverishment of the peasantry. Under the Duvaliers and subsequent military dictatorships, these informal lenders were often allied with local section chiefs and other elements of the repressive apparatus. In some cases they were one and the same. The BCA, unfortunately, had shown very limited effectiveness in breaking through these barriers and delivering credit to peasants effectively.

With the return of the democratic government, the Ministry of Agriculture directed the BCA to seek more agile and effective mechanisms for making credit available to the peasant sector. The BCA has recently signed agreements with a number of NGOs, and as a part of an emergency initiative, has delivered 13,900,000 gourdes (approximately US $960,000) to these institutions for rural credit _ both for direct lending as well as for guarantee funds to access the formal banking system. The BCA hopes to make additional funds for rural credit available through this mechanism in the near future, and is examining other options for increasing access to credit. /p>