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Revolving Loans Fund

In 2007, the Arab Authority launched an initiative to set up a revolving loans fund to finance projects for small farmers in various Arab countries. This is because more than 90% of the rural and semi-rural population in the Arab countries are involved in the agricultural sector, and are mostly small farmers.
In 2008, the Fund was approved with a proposed capital of USD 100 million, out of which the Arab Authority contributes USD 10 million. The Fund is used to provide revolving loans to small farmers in various Arab countries.  AAAID seeks to mobilize resources for the program from various funding institutions, while overseeing the lending operations and providing agricultural services to farmers.

Objectives of the Revolving Loans Fund:

  1. To provide a continuous source of revolving loans to producers in form of small scale farmers, livestock breeders, fishermen and individuals working in the field of agricultural production especially in rural areas.
  2. To encourage financial institutions in rural areas as well as community based organizations (CBO) to provide small-scale farmers with access to small loans continuously and promptly.
  3. To provide access to advanced technology in the field of food production and improve income of the producers and attain food security. 
  4. To contribute to the alleviation of rural-urban migration.
  5. To build strong alliances with local markets to elevate agriculture and agricultural production.

Strategies of the Revolving Loans Fund:

  1. Promote opportunities for achieving reasonable financial and profitability returns for small producers to enable them to meet financing costs and enable access to intermediary financial institutions capable of managing direct lending.
  2. Focus on food deficit countries with adequate food production conditions and lack in effective funding institutions, accompanied by technical support that can increase the vertical production. 
  3. Adopting a collaterals arrangement that is appropriate to the financial capabilities of small producers such as collective and community guarantees as well as those prevailing in the target country.
  4. Emphasize flexibility and decentralization in the implementation of the loaning program.

Development programs implemented by the Revolving Loan Fund:

No

Program

Country

Number of Households

Beneficiaries

1

A USD 2 million line of credit for agricultural micro-financing

Jordan

330 1,650

2

A USD 2 million financing line for a rural credit fund network

Mauritania

- -

3

A fishing boat project for small fishermen

Comoros

10 100

4

A project of irrigated vegetables production

Mauritania

120 600

5

A project of irrigated feed production

Mauritania

180 900

6

A financing program for small scale farmers

Sudan

600 3,000