Success Stories
Farmers Bank on Future in Peacetime Angola
In many rural areas of Angola, decimated or degraded after almost thirty years of war, Angolans are just in the beginning of resettling and re-establishing small farms in a country that was virtually self-sufficient in food under the Portuguese colonial rule so long ago. In its heyday, Angola was a major exporter of coffee and cotton. Today displaced persons and refugees return to lands dotted with minefields and towns blown out by the war, and hundreds of thousands are still dependent on food aid. For farmers like those in Humpata, Huila province, a little bit of help accessing inputs and quality seeds could make all the difference in maintaining food security and producing enough to market. But who would risk giving credit to farmers in a weak agricultural economy, barely recovering from three decades of war?
So when the commercial bank Banco Sol signed in-kind credit agreements to small-scale farmers in Humpata in April 2003, CLUSA country director Estevão Rodrigues remarked with pride that "this was the first time a bank representative in Angola has gone to the field to sign credit agreements." The 92 farmers organized into 19 groups received potato seeds, fertilizers, and pesticides valuing US$27,000. Since April of 2002, CLUSA, a United States non-governmental organization funded by the United States Agency for International Development (USAID), has been working with rural group enterprises and agricultural marketing in Angola, and provided the loan guarantee to give Banco Sol backing should the farmer groups default.
Even with Rodrigues'optimism, probably few looked forward to the August repayment deadline without some doubt. As Banco Sol administrator Sergio Lavrador explained, "There is no culture of banking here. Since Angola became independent (1975), no one has worked with banks, and so there is little trust to do so."
By the August deadline though, the farmer groups had repaid the credit, with interest, in full and on time. Lavrador says that he was not surprised, since the farmer groups were well-trained in group solidarity, they had a good season, and the interest rate was reasonable. "We have no administrative costs since CLUSA does all of the work with the farmers; we (Banco Sol) just supply the credit." So Banco Sol can afford to give farmers a 10% annual interest rate, an affordable rate in most cases despite high inflation.
For the Humpata farmers growing potato in the Banco Sol credit scheme, the access to seeds and inputs made it possible to sell in good quantity not just to local markets, but also to take the first few stabs at marketing to formal markets based in Luanda, that until then had depended on imported potato. "We want to buy more local products," said Food Safety and Hygiene Director Frans Muller of ESS/SHRM, Inc., a multinational catering company that services oil company bases in Angola. Formal buyers are pleased with the quality of potato, carrot, onion, tomato, and bell pepper coming from the small farms that CLUSA advisors are assisting.
With US$213,000 more in credit agreements signed with Banco Sol, farmers are getting the seeds, inputs, and irrigation supplies they need to boost production and meet demands of the peacetime markets. "This was the first time Banco Sol or any Angolan bank has given credit to small-scale farmers," Lavrador said. "We are looking forward to more successes."
