Challenges

IFAD funds this service through the project: “Access-To-Markets (ATMP)” in Kyrgyzstan

The proposed online platform seeks to respond to following challenges:

- Access to financing. When borrowing from standard financial institutions, smallholder farmers are constrained by lack of collateral. Warehousing certificates as collateral is a solution to this problem;

- Access to information for decision-making. Access to market information, supply and demand analysis, prices throughout the year will be provided so smallholder farmers can understand and make informed decisions on when it is appropriate, more profitable to use their stocks for raising funds;

- Legally compliant framework. The system will apply digitally sound application to manage stocks, and to secure certificates as collateralizable assets readily acceptable to financial institutions.

- Capacity building. As a part of the implementation of this solution, smallholder farmers and farmer groups will be trained on the good practice management, packing and handling of commodities so that they are transported to and from warehouses without damage or alteration in quality.

Primary target

Which group does your product/service primarily target?

Description of Innovation

This product aims at developing the warehousing certificate mechanism of securing loans for farmers, and creating conditions for the project to achieve its development objectives of accessing to market and improving livelihoods for smallholder farmers. This is achieved by introducing:
1) Unified state electronic register of warehouse certificates, with access to the database of financial institutions. Together with the State Service for Regulation and Supervision of the Financial Market of the Kyrgyz Republic;

2) Electronic register of warehouse certificates, with access to the database of financial institutions. This registry will allow to have online access to an up-to-date database of all certificates and their holders. This will ensure data transparency, minimizing the risks of intentional breaches, with the direct participation of the Ministry of Agriculture of the Kyrgyz Republic;

3) Electronic portal of information on agricultural prices. With analytics on trends in the main types of agricultural products.
Introducing the use of warehouse certificates toward collateral requirement when borrowing.

Results

As the constraint of collateral is lifted, smallholder farmers can have greater access to credit in order to finance their production activities as well as their other non-food related activities. This will be translated into increased access to farming equipment and tools, more food production, increased access to markets, more stable communities

More production and widened access to markets will mean more job creation, increased incomes and improved livelihoods.

Lessons Learnt

Given the project currently being at its inception phase, it is too premature to extrapolate lessons learnt