In 2007, AAAID 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 AAAID 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:
- Provide sustainable revolving loans to small producers of farmers, animal breeders, fishermen and those working in the agro-processing industries, especially in rural areas.
- Encourage rural financial institutions and community-based institutions (CBO) to provide small and small-scale producers access to small loans in a timely and sustainable manner.
- Enable the use of improved technologies in food production to increase producer incomes and enhance food security.
- Contribute to the alleviation of rural-urban migration.
- Build a strong partnership with local communities to promote agriculture and food production.
Strategies of the Revolving Loans Fund:
- Promote opportunities for achieving reasonable financial and profitability returns for small producers, enabling them to meet financing costs and enable access to intermediary financial institutions capable of managing direct lending.
- Focus on food deficit countries that have favorable conditions for food production and lack effective funding institutions. The funding process should be accompanied by technical support from vertical increases in production.
- Adopting guarantees that are appropriate to the financial capabilities of small producers such as collective and community guarantees as well as those prevailing in the target country.
- Emphasize flexibility and decentralization in the implementation of the funding program.
Development programs implemented by the Revolving Loan Fund:
Number of Households
USD 2 million financing line for the Agricultural Credit Corporation
USD 2 million financing line for the popular savings and loan funds network
A fishing boat project for small fishermen
Project of irrigated vegetables production
Project of irrigated fodder production
Small farmers programs