IFAD, a specialized agency of the United Nations, was established as an
international financial institution in 1977 as one of the major outcomes of the 1974 World Food Conference. In this context, IFAD was created to mobilize resources on concessional terms for programs that alleviate rural poverty and improve nutrition. Unlike other international financial institutions, which have a broad range of objectives, the Fund has a very specific mandate: to combat hunger and rural poverty in developing countries.Since its establishment, IFAD has financed 603 projects in 115 countries and independent territories, to which it has committed USD 7.7 billion in grants and loans. IFAD financing is USD 7.3 billion in loans and USD 31.9 million in grants.
The Philosophy of the Project
The project is intended to provide funds from the International Fund for Agricultural Development, under technical assistances of the Rural Development Bank, to eligible Non-Government Organizations who will on-lend these funds to the IFAD’ s target groups. The assessment of the expected demand for credits from the members of the IFAD’ s target group indicated that there is a requirement of USD 1.235 million of incremental funds over five years (2001-2006), based on an overall 95% repayment rate. The lending consists of:
- The seasonal loan (about USD 38 to 79) to finance farm inputs and the Agricultural Improvement Program (AIP). Technologies around USD 30,000 (25,000 in the lowlands and 5,000 in the uplands). The households targeted by the AIP borrow for an average period of six months;
- USD 11,625 short-term loan for the farm and the off-farm income generation (between USD 18-38), which are repaid within one year;
- An amount about USD 6 250 medium-term loan for the farm and the off-farm income generation repayable over two years (i.e. USD 72 for a share in a pump). The interest rates are marketed under the saving and credit program whereas 11,785 households are expected to benefit from the program.
The Targeted Activities
There are three groups of activities for which the potential borrowers from the IFAD target group might require credits: (i) crops and livestock productions; (ii) agro-industries and manufactures; (iii) and trade and other services.
The Responsibilities of the RDB
The RDB has the following duties:
- Confirming and selecting qualified NGOs;
- Organizing and providing specialized trainings to the NGOs’ staffs;
- Processing the on-lending of the loan from the Ministry of Economy and Finance;
- Reviewing and consolidating the annual Action Work Plan and Budget (AWPB);
- Processing and consolidating the eligible project expenditures and withdrawing the applications for submission to the Project Support Unit (PSU);
- Establishing an effective monitoring and evaluation system;
- Preparing the quarterly project progress reports for submission to the Project Support Unit.
The Duties of Participated Entities
The participated NGOs must provide savings and credit services to the households living in the communes targeted by the AIP. Theses NGOs can follow their own approach for the delivery of savings and credit services but shall include in their program: (i) working groups and village bank instruction; (ii) participating to the demonstration and extension of agricultural program of the IFAD’s target groups.
The rural credit project under the IFAD loan No.513-KH is being successfully implemented since 2004. Seven RDB partners are operating in four targeted provinces: Seilanithih and NEW in Pursat; SDR, KRDA, AFA and CBIRD in Battambang; Seilanithih and AFA in Banteay Meanchey; and CEB, CBIRD and NEW in Siem Reap