Gambia - Incentive-Based Risk Sharing System for Agricultural Lending (GAMIRSAL) Establishment Project

Access to finance is one of the most important challenges hampering the progress of agricultural development in the Gambia. Most of the population in the agricultural sector can only access to the informal financing, which probes not to be sustainable, and much less capable of addressing all the needs of agribusinesses .So far, the technical and financial partners’ interventions to enhance access to finance remained mainly in the form of matching grant, which isa one-off grant, and therefore not a sustainable source of financing.8.The rationale for the Bank’s involvement in the proposed project rests on its alignment with the current top priority areas of intervention of both the Bank and The Gambia, as outlined above. The GAMIRSAL Establishment Project would address a number of market failures, including: i) difficulties for actors along the agriculture value chains to access suitable financial services and products, due to lack of satisfactory collaterals and risk mitigating instruments as well as prohibitive borrowing cost; ii) reluctance of FIs to finance agriculture despite their high liquidity, due to their lack of knowledge of the agricultural sector, the agriculture perceived and inherent risks including climate risks and the lack of agriculture tailor-made financial products; iii) limited capacity of actors along agriculture value chains to develop bankable business plans and efficiently manage credit and climate change risk. Also, the project fits well into the new policy paradigm for agricultural development promoted by the Bank and the Government, which aims at transforming agriculture, through the Gambia Agriculture Transformation Program. The project primarily contributes to climate adaptation results. As such, 50% of the total approved amount is attributed as climate finance, of which 3 million USD is dedicated to adaptation.