So we are getting ourselves prepared to offer the agricultural finance in 2010. But, agricultural finance is a risky business for many reasons. First, the agriculture depends heavily on the weather. Without sufficient mitigating factors, the harvest could fail and the source of repayment also fails. Second, the agriculture is highly seasonal. So the loan needs to be structured in irregular payment schedule, increasing the risk. Third, the agriculture is subject to volatile price fluctuation depending on the level of harvest. A good harvest could mean an over-supply, without proper export mechanism, reducing the sale price. This price volatility also affects the payment ability. Also, the agricultural harvest depends on the exact timing of input supply, such as fertilizer use and water supply. Moreover, many farmers are doing subsistence farming so if you do not profile the farmers properly, you may end up lending to finance their own consumption. In this case, your source of repayment does not exist. These are only part of the reasons. For more, please refer to the left.
Thus, the agricultural lending is a risky business that many banks avoid, causing the farmers to remain underserved. Rwanda is not an exception. Nonetheless, we are entering into this industry, but with extreme caution and a lot of preparation. Part of the preparation is to have an agricultural expert on board.
Opportunity International Africa has John Magnay. He is Special Advisor to OI Africa on Agriculture. He was born to an English farmer. His father ran a huge farm that Henry Ford established to showcase an exemplary farm to eventually promote sales of Ford's tractors. So John grew up with hands-on experience in various aspects of farming. After college, he moved to Uganda in 1977 to help his father start a dairy business, owning 3,000 heads of cow. His experiences expanded to other sectors of agriculture and to other Sub-Sahara African countries, including Rwanda. In total, his direct experiences in African agriculture have been 32 years. He is well connected to government offcials and well familiar with the value chains of the agriculture industry by different types of crop and by geographical regions.
Despite all the preparation and extreme caution, however, we may not be successful without the blessing of the almighty God. We are entering into this market knowing the high risks because the needs are great but have not been served. In other words, we are taking on the responsibility on our shoulders to serve the underserved needs of the poor with faith in the Lord. I trust that the good Lord will bless the heart and intent. Pray with us and for us to the Lord. - Jeffrey
P.S.: While I was talking with him, I have learned an interesting fact about his family. Magnay was a spin-off from MacNay, a Scotish name. His forefather was disowned by the MacNays for political reasons and he settled in England and changed the name to Magnay. Now the Magnays are approximately 400 a half of which is in Australia. It was amazing to hear that they could count all of the family members by name and what they do and where they live. It was the same as the "Jokbo" in Korea.