Despite its significant contribution to the country’s GDP and employment, Kosovo’s agricultural sector remains under-served by the country’s financial institutions.
The EFSE Development Facility commissioned the "Agricultural Finance in Kosovo" study in order to shed light on the specific needs of the agricultural sector in Kosovo, particularly with regard to financing and the challenges faced by the financial institutions, and also in order to support positive awareness about agricultural finance and its opportunities for the country.
Major findings and recommendations include:
The study found that there is a strong need for long-term loans to finance agricultural machinery, storage facilities, greenhouses and planting new orchards, as well as equipment for agricultural processing. Financial institutions are interested in lending to the agricultural sector but face a number of challenges in doing so (including affordability, availability and ability constraints).
In summary, both financial and agricultural sectors have to improve. Financial institutions can learn to better understand the specifics of agriculture and the various risks of agricultural production. In turn, agricultural producers can enhance their financial literacy and agricultural knowledge to better identify opportunities and to become more profitable.
To make it work, agricultural finance has to be well embedded into the financial institution’s strategy in order to build up successful and sustainable agri¬cultural lending. Business models for agricultural finance should address the following key issues:<br/>
- products, services and marketing – better understand and address farmers’ needs
- risk management – improve risk assessment
- operational efficiency – lower delivery cost
<br/>Despite the difficulties, the financing situation is improving. A number of financial institutions have revised their approach towards agriculture in late 2012 and early 2013 by developing new products which better reflect the needs and specifics of agricultural producers.
