Special agricultural lending Institutions - the Case of Macedonia

Kovachev, Goran (2014): Special agricultural lending Institutions - the Case of Macedonia. Published in: World Review of Business Research , Vol. 4, No. 1; March 2014 (31 March 2014): pp. 240-252.

Abstract

Accounting over 10% of country’s GDP, agriculture has substantial role in Macedonian economy. As a viable, yet risky economic sector, it is of great significance for this paper to show to the policymakers that creating special financial (sometimes state owned) institutions for lending in agriculture is a key element in helping farmers to enhance agricultural activities, thus to obtain self-sustainability. One such institution already operating in Macedonia is Agricultural Credit Discount Fund (ACDF). The main purpose of this study is to emphasize the importance of ACDF’s operations in expanding the outreach and accelerating economic welfare of farmers and rural poor. Brief analysis of ACDF’s performances in the last 10 years shows that the Fund operating in close collaboration with the participating financial institutions and the Government has significantly succeeded in increasing banks’ agriculture credit portfolio by 204%, decreasing interest rates by 8.5 percentage points and supporting over 15,000 jobs or about 1.6% of nation’s work force. The general conclusion of the study suggests that ACDF’s ‘modus operandi’ could be a guideline for similar institutions in developing and transition countries, as it creates prerequisites for easier access to finance, stronger competition among banks and increased income to its beneficiaries.

• Item Type: MPRA Paper
• Language: English
• Keywords: agriculture; Macedonia; agro-finance; Agricultural Credit Discount Fund; Macedonian Bank for Development Promotion
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; G - Financial Economics > G2 - Financial Institutions and Services; H - Public Economics > H8 - Miscellaneous Issues; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture

References

Bator, M. F 1958, The Anatomy of Market Failure, The Quarterly Journal of Economics, Volume 72, Issue 3 (Aug., 1968), viewed 11 January 2013, p. 351

Dimovska, E 2010, ‘Bringing Finance to Rural People – Macedonian Case’, EastAgri Annual Meeting October 13-14 2010, Istanbul, viewed 18 January 2013, p. 4

International Fund for Agriculture Development, 2008. IFAD in Macedonia. viewed 30 January 2013 <http://operations.ifad.org/web/ifad/operations/country/home/tags/macedonia>

Law on Borrowing from the International Fund for Agriculture Development for implementation of Agricultural Financial Services Project 2000. (No. 107). Skopje. Official Gazette of the Republic of Macedonia

Macedonian Bank for Development Promotion, MBDP 2013, ACDF Portfolio Report for 2012 [Internal Annual Report]

National Bank of the Republic of Macedonia, NBRM, 2013, Annual Report for NBRM operations in 2013, viewed 15 November 2013, p. 45 (in Macedonian)

Riley, J 2006, AS Market Failure - Government Intervention in the Market, Eton College, September 2006, viewed 18 January 2013, <http://www.tutor2u.net/economics/revision-notes/as-marketfailure-government-intervention-2.html>

Robinson, M. S 2001, The Microfinance Revolution – Sustainable Finance for the Poor, International Bank for Reconstruction and Development/THE WORLD BANK, Washington, D.C., p. 142

Ruotsi, J 2008, Refinancing facilities: IFAD introduces an innovation in rural finance development, December 2008, International Fund for Agriculture Development, Rome, viewed 15 January 2013, p. 1

State Statistical Office, SSO 2007, Agricultural Census, 2007, viewed 10 January 2013, p. 10 (in Macedonian)

State Statistical Office, SSO 2013, Macedonian Work Force in Second Quarter of 2013, viewed 16 November 2013, p. 1 (in Macedonian)