The goal of the Rural Financial Services and Marketing Programme (RFSMP) is to reduce rural poverty in Moldova through creating enabling conditions for the poorer and poorest members of rural society to increase their incomes through greater access to markets and employment .
The Programme’s objective is to extend employment opportunities and participation of small farmers in competitive commodity value chains through enhanced access to financial services for the small owners , women practicing off-farm businesses and young farmers, as well as off-farm entrepreneurs and processing units.
The Programme is expected to comprise four components:
- Rural Financial Services;
- Value Chain Development for Rural Poverty Reduction;
- Pro-poor Market Derived Infrastructure;
- Programme Management.
Component 1: Value Chain Development for Rural Poverty Reduction – This component aims at the mapping and pro-poor management of competitive commodity and services value chains with actual or potential strong linkages to the target groups, i.e. poor rural people, thus, offering best opportunities for rural poverty reduction in the context of rural market economy under development in Moldova, and for promotion and compliance with the international quality standards for those products within the given value chains.
Component 2: Rural Financial Services is expected to consist of four sub-components:
Sub-component 2.1 „Financing of Participating Financial Institutions (PFIs) for loans to poorer small-scale farmers” is aimed to support target group members with credits up to USD 50 000 for the period of 5 (five) years. PFI would finance 15% from the total portfolio of sub-component, while the other 20% being financed from the client’s own contribution.
Sub-component 2.2 „Financing of PFIs for on-lending to off-farm rural micro-entrepreneurs”, also, is aimed to support target group members, but is addressed to landless farmers. The Credits shall constitute up to USD 7000 for maximum of up to 2 years. Also, as under the sub-component 1.1, PFIs would finance 15% from the total portfolio of sub-component, while the other 20% being financed from the client’ own contribution.
Sub-component 2.3 „Financing of PFIs for medium loans to rural processors, wholesalers, and possibly producer/marketing associations for investment purposes” operating in the value chain having strong linkages with primary target groups and where investments under the given sub-component can offer impressive indirect benefits to primary target groups through higher demand for their products and generating new jobs . Credits would constitute up to USD 100.000 for the maximum maturity period of up to 7 years. In case of this sub-component, PFIs would finance 15% from the portfolio, while clients the other 20 %.
Sub-component 2.4 “Capacity building of PFIs, credits follow-up and subsidies” – Under this sub-component, accredited PFIs would benefit from the international Technical Assistance (TA) and training oriented to improvement of their understanding and performance with respect to: (i) specific needs and modalities for provision of sustainable rural financial services to reduce poverty; (ii) development of new innovative financial instruments relevant to the RFSMP goal and objectives; (iii) development and incorporation of management of remittances; (iv) credit risk assessment and management; and (v) credits recovery and debt management. Under section of training with regard to remittances management, IFAD’s Financing Facility for Remmitances (FFR) shall be presented in details to generate full awareness of that Facility among PFIs, that offers grants up to Euro 200 000 for the implementation of activities aimed to promote financial systems including innovative partnerships between the rural financial institutions and remittances operators.
Component 3: Pro-poor Market Derived Infrastructure