The African Rural and Agricultural Credit Association (AFRACA)

Feb 27, 2013

The MFW4A Secretariat contacted Mr. Saleh Usman Gashua, Secretary General of the African Rural and Agricultural Credit Association (AFRACA) to present his organization.

Could you briefly introduce AFRACA?

The African Rural and Agricultural Credit Association (AFRACA), established in 1977, is a regional Association of Sub-Saharan financial institutions involved in providing financial services to the rural population of the region. AFRACA’s goal is to build a strong and sustainable regional network of banks and microfinance institutions that provide opportunities for learning amongst members and promotes rural and agricultural finance in Africa.

The mission of AFRACA is to improve the rural finance environment through the promotion of appropriate policy framework, and to support member institutions to provide sustainable quality financial services to the rural population. The AFRACA secretariat is based in Nairobi, Kenya; its membership is open and consists of: Central Banks, Commercial Banks, and Agricultural Banks, Development and Cooperative Banks, Government ministries, Insurance outfits, Training Institutions, Non-governmental organizations (NGOs) and Microfinance Operators and their networks across Africa.

What are some of your major activities?

AFRACA’s core programs are organized around a thematic approach to rural & agricultural finance and as implemented through activities and workshops on cross cutting topics; these contribute to the establishment of appropriate rural finance policies in Sub-Saharan Africa. In addition, AFRACA continues to provide an information hub in the sector in Sub Saharan Africa. Every year, AFRACA organizes specialized rural and agricultural finance programs, among them the Central Banks forum, the Agricultural Banks forum and the Micro Finance Forum. The central banks forum brings together financial service providers and regulators and other stakeholders for focused discussions on policies, laws and regulations as they impact on rural and agricultural finance. It is based on the recognition of the role of Central Banks in rural finance policy development.

The Agricultural Banks Forum brings together financial and non-financial institutions in the field of Agricultural Finance to discuss ideas on emerging issues of agricultural financing, in addition to other areas of common interest (e.g. agricultural product development, value chain development and marketing). The Microfinance Forum brings together institutions, such as AFRACA-member microfinance institutions and banks, dealing with microfinance service provision to discuss their role in rural finance, and specifically microfinance to the small and medium enterprises as well as financing to the agricultural value chain. Moreover, AFRACA organizes sub-regional workshops, which feature research and high-level discussions on specific themes decided upon during the AFRACA General Assembly.

Every theme runs for a period of two years and the current sub-regional theme is: “Enhancing the Agricultural Value Chain through innovation” In addition to the continental-wide partnerships, at the international level, AFRACA works closely with the Confédération Internationale du Credit Agricole (CICA), the Asociacion Latino-Americana de Instituciones Financieras para el Desarrollo or Latin-American Association of Development Finance Institutions (ALIDE), the Near East North Africa Rural and Agricultural Credit Association (NENARACA) and the Asia-Pacific Rural and Agricultural Credit Association (APRACA) to jointly organize the World Congress on Agricultural and Rural Finance which brings together financial institutions operating in more than 100 countries and is held once every three years.

What are some of AFRACA’s most notable achievements?

As a membership-based organization, AFRACA’s participatory approach involves the members in the planning and implementation of the programmes. This is further enhanced by providing specialized platforms on which member institutions involved in different areas of rural and agricultural finance meet and interact alongside their areas of specialization. AFRACA’s capacity building programme, known as the Technical Exchange among Developing Countries (TCDC), is one of the most unique products for members. It is a staff exchange program that arranges special training events within the AFRACA network, and has facilitated staff exchanges of over 100 individuals from participating institutions.

This program has helped introduce new thinking which has led to marked changes within financial institutions. Participants have outlined a wealth of tangible effects from their staff exchange visits, including new ideas and methodologies gained by both visiting and hosting institutions. This programme is being re-engineered in line with well defined “learning routes” meant to enhance the exchange programme to ensure optimal learning by participants. Further major successes lies in AFRACA’s partnerships and networking activities aimed at streamlining, integrating and coordinating rural and agrifinance activities in Sub-Saharan Africa.

Through its specialized workshops and other fora, the association has created a platform where many mutually beneficial partnerships have been developed among members, and also between members and donor organizations. There has been replication of best practices by members resulting in increased growth in business and new products being developed by individual institutions out of the networking opportunities and lessons learnt from each other. The quality of AFRACA’s knowledge management and information sharing activities represents a third major achievement. Over the years, AFRACA has developed a data base of information on rural finance and continues to develop the information sharing framework which includes:

  • IFAD supported Knowledge Management Programme
  • The AFRACA Website(www.afraca.org)
  • The AFRACA Quarterly Newsletter & e-newsletter
  • The AFRACA Rural Finance Series published once every two years.

What are some of the major challenges faced by your institution?

A major challenge faced by AFRACA is inadequate resources in the face of growing demand for its diverse value-adding initiatives and services. Another major challenge for AFRACA is on how to follow up on the successful implementation of workshop and conference outcomes and especially how these can translate into policy initiatives.

Streamlining and co-coordinating rural and agricultural finance activities being implemented by various organizations on the continent, such as the Alliance for Green Revolution in Africa (AGRA), NEPAD CAADP, AFRACA and MFW4A among others, is also challenging. Another major challenge which AFRACA faces is the lack of political will in most African countries to realize the development potential of the agricultural sector. Public sector support to agriculture, and particularly well-designed public support tailored to enable agriculture to flourish is lacking in many African countries. Moreover, private sector investments are insufficient to promote a vibrant agricultural sector.

How can Making Finance Work for Africa support your work?

MFW4A can partner with AFRACA to improve on and help implement existing development programs. MFW4A can also help AFRACA secure technical support that will help reposition the association to meet the challenges of improving the rural and agricultural finance environment in Sub-Saharan Africa. This may be, in subject matter, linking with specialists and providing training, among others.

Finally, MFW4A and AFRACA can work together to come up with a pragmatic and target specific policy and advocacy framework to ensure the implementation of policies and best practices by relevant stakeholders across the continent. For example, the partnership can provide a policy dialogue framework by using relevant networks and platforms, like the Comprehensive Africa Agriculture Development Programme (CAADP) under the Africa Union.