Yoma Bank and Maha Agriculture Public Co has announced the completion of a MMK 3.5 million (USD2.6 million) funding agreement in support of Maha Agriculture’s lending activities in Myanmar, which will enable Maha Agriculture to reach an additional 6,000 farming families

Yoma Bank and Maha Agriculture Public Co, a local microfinance institution, yesterday announced the completion of a K3.5 billion ($2.6 million) funding agreement in support of Maha Agriculture’s lending activities in Myanmar. 

The agreement will enable Maha Agriculture to reach an additional 6,000 farming families, a sector which has so far been underserved by formal financial institutions. 

The company will deploy the funds to help farmers buy fertilisers, seeds and other agricultural inputs. It will also lend to smaller microfinance enterprises in support of their business activities. Maha Agriculture currently services 10,000 farming families across Myanmar, with an aggregate loan book of K7 billion. 

“The agriculture sector is the backbone of Myanmar’s economy and employs 70 percent of the country’s labor force. [Yet], many farmers have little to no access to credible lenders. This drives them to borrowing from informal moneylenders with high interest rates, diminishing any profits,” said Matteo Marinelli, CEO of Maha Agriculture. He added that Maha Agriculture “aims to provide more small, unsecured loans to farmers, vendors and micro enterprises.”  

Teun van Vlerken, Credit Risk Consultant with Yoma Bank under the LIFT-supported Agribusiness Finance Program, said the funding product offered by Yoma Bank and Maha Agriculture will set a new lending standard in Myanmar.

“‘It is less relevant what assets an MFI can pledge, but rather what cash flow they expect to generate by accessing our funding. Letting go of fixed collateral requirements and engaging in responsible, cash flow-based lending is key to unlocking the potential of Myanmar’s emerging agricultural sector.”

The move comes amid greater political will to support the country’s agriculture sector. Last week, U Kyaw Win, Union Minister for Planning and Finance, said attempts will be made to lower interest rates at the Myanmar Agricultural Development Bank (MADB) so that it is able to support the entire agriculture supply chain.

He said that in the 50 years during which MADB has provided loans to farmers, the sector has not grown by much, adding that “the only way agriculture will grow is for MADB to become a real development bank that supports the entire supply chain, including farmers, factories and traders.” 

“For agricultural sector development, private banks will be allowed to participate. MADB alone providing loans to farmers of a few crops is not enough. For agricultural sector development, it will be faster if the private sector is involved,” U Kyaw Win said.

In 2017-18, Myanmar’s agriculture exports hit $2.8 billion in value, up $171 million compared to 2016-17, according to the Ministry of Commerce.

(The Myanmar Times: https://www.mmtimes.com/news/yoma-bank-maha-agriculture-support-lending-microfinance.html )

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