Transcript Una declinazione attuale del campo di impegno

Financing
coffee farmers
in Ethiopia:
challenges and
opportunities
Bastin, A. - Matteucci, N.
Lux Development
(Luxembourg) –
Marche Polytechnic
University (Italy)
FAO Conference on
Rural Finance Research
19-21 March 2007
Overview on Ethiopia
Ethiopia: one of the poorest countries: ranks 170
out of 177, UN-HDR (2006)
•
• Recent GDP & GDP/N recovery (mid-90’)
• Volatile & unbalanced export
• Coffee on total export: from 63% (1995) to 37%
(2004), mainly due to price shocks since 1999
• Coffee crisis: huge impact on a small-scale
agriculture; low access to rural communities
•Many farmers, traders, cooperatives bankrupted
•The pervasive (nation-wide) impact of the crisis
Big agricultural potential in a poverty trap
• Agricultural potential; 84% of population is rural
. • Lack of infrastructure: transport, TLC, health, etc.
• Natural calamities (drought) in some areas,
recent conflicts
• Poor agricultural practices and lack of surplus,
difficult to mobilize
• High quality, organic coffee VS poor value chain
• No traditional finance for the poor
• Which role for a “sustainable” Microfinance ?
(Morduch,1999)
• Which credit, saving and risk management
instruments ? (Dercon, 2002)
A survey to fill the informative gap
• No detailed evidence on financial services for
.
Ethiopian coffee farmers
• Only 1 million the outreach of MFI (end of 2004),
out of 70 mill. - 84% rural
• Our survey on Jimma Zone, coffee-oriented
(Oromia, largest Regional State); Summer 2005
• Interview of 120 coffee farmers(random sampling)
• Complemented by focus group discussions
• Further interviews with financial providers, etc.
Jimma Zone in Ethiopia
Background Statistics
Mean
Std. Dev.
Median
Min.
Max.
Age (years)
46
10.7
45
25
73
Family Size (n.)
7.2
2.8
7
2
14
Working people
(n.)
5.4
2.3
5
0
14
House - road
distance (Km.)
2
2.3
1
0
12
House - market
distance (Km.)
4.7
4
5
0
15
Land size (Ha)
1.2
0.8
1
0.56
5.5
Coffee size (Ha)
0.6
0.5
0.5
0.07
3.2
First activity
income (%)
70.7
13.8
70
40
100
Main risks perceived
1)
2)
3)
Coffee price volatility: 85%
Coffee Disease: 55%
Lack of access to loans: 47%
Risk Management instruments:
1)
Activity diversification (other crop, animal
fattening):
45%
2) Coffee differentiation (organic) : 42%
………
5) Commercial credit:
14%
Risk management VS risk coping strategy,
cf. Dercon, 2002
Access to FS (loans) (64% of sample)
Source of
loan:
Frequ.
(%)
Mean
(Birr) - [$]
Coeff.
Variat.
(%)
Min.
Amount
(Birr)
Max.
Amount
(Birr)
Friends
16.2
294
[34]
116
60
1,250
Traders
8.8
145 [17]
71
60
300
Money
lenders
8.8
193 [22]
69
60
400
Cooperativ.
32.3
115 [13]
30
42
200
MFI
33.8
905 [105]
27
445
1,500
Total
100
330 [38]
52
133
730
Duration and cost of loans by source
Source
Duration (months)
Min - Max
Annual interest rate (%)
Min Max
Friends
2
12
0
120
Traders
5
8
200
660
Money
lenders
5
7
120
171
Cooperat.
3
6
0
0
MFI
6
12
11.5
11.5
Use of Loans
1) Consumption (food, clothing, education, house
construction): 53%
2) Other productions (trading, animal fattening,
other crops) 32%
3) Coffee Inputs: 14%
Remember: MFI loans in the sample are only
for production
Main problem with loans
1) Inappropriate terms (grace period,
duration, etc.):
37%
2) No problem:
29%
3) Small amount:
20%
4) High interest rate: 14%
FS demand and financial GAP
DEMAND
Mean Mean
(Birr) ($)
Min
Max
Coeff.
Var.
(%)
20,000 155
2,458
284
100
2,105
243
0
20,000
185
86
(58)
-
0
100
-
(Birr)
GAP
(Birr)
GAP %
(unweighted
average)
Most useful (potential) FS product
•
•
•
Saving products: 64 %
Loans:
25 %
Saving and loans: 10 %
•
However, SP mostly unavailable in rural
areas (saving “in kind”)
SP as a partial substitute for risk
management products (insurance) (F)
SP could extend the outreach of MFI (I)
•
•
Conclusions
• Huge loan gap. Moreover, 1/3 credit is
informal: costly and subsistence-oriented
• MFIs: 1° provider (1/3 sample). It offers the
best conditions. Limited outreach.
• MFI loans as enablers of risk management
strategies !!!
• Further evidence needed on “financial”
cooperatives
• Clear demand for saving products
Policy recommendations
• Product Innovations from MFI required:
1) Better tailored production loans (possibly
also consumption loans)
2) Saving products for rural communities
3) Increase the outreach of MFI
• Training in finance for operators in rural
communities (also for cooperatives)
• Rural Banks?