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MADB to help fuel growth across entire agriculture supply chain

Attempts will be made to lower interest rates at the Myanmar Agricultural Development Bank (MADB) so that it is able to support the entire agriculture supply chain, according to U Kyaw Win, Union Minister for Planning and Finance.

He said that in the 50 years during which MADB has provided loans to farmers, the sector has not grown by much.

“Currently, MADB just accepts cash from [State-owned] Myanmar Economic Bank and disburses the funds as loans to farmers of selected crops during harvest season. It is impossible for the sector to grow and develop under such conditions,” U Kyaw Win said.

The way he tells it, “the only way agriculture will grow is for MADB to become a real development bank that supports the entire supply chain, including farmers, factories and traders,” he said.

That is the reason the MADB was last year moved under the Ministry of Planning and Finance, so that it can participate in conducting reforms, he added. During previous governments, MADB had been under the Ministry of Agriculture, Livestock and Irrigation.

The other major obstacle is the high interest rate of 8 percent, which farmers had been forced to accept in the past. “Arrangements are being made for those rates to be halved,” U Kyaw Win said. This will involve combing domestic loans with loans from private as well as foreign banks.

“For agricultural sector development, private banks will be allowed to participate. Only MADB providing loans to farmers of a few crops is not enough. For agricultural sector development, it will be faster if the private sector is involved,” he said.

The banking sector has wasted no time. Just last month, Mandalay Coffee Group, a coffee processor and exporter based in Mandalay comprising 42 individual shareholders who are involved in different parts of the coffee business supply chain, such as processing, exporting and retail, successfully obtained a K800 million loan from Yoma Bank to improve its output.

In February, female agricultural producers in Pakokku, Magwe Region, became eligible for loans from KBZ Bank. The project will be piloted over 12 months, with the NGO ActionAid providing collateral to underwrite the credit. This is expected to help the women unlock their entrepreneurial potential and support their families.

Source: Myanmar Times

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