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Minister of Agriculture and Fisheries, Hon. Dr. Christopher Tufton, says the Credit Reporting Bill that was approved by the House on February 9, will enable farmers to be integrated into a network that allows their track record to determine their credit worthiness.
“This is an extremely positive development for the sector,” Dr. Tufton remarked, in his contribution to the debate on the Bill.
He pointed out that the sector is made up of a significant numbers of small farmers, representing approximately 76 per cent of farm holdings, and that these farmers operate on one hectare or less.
“Many times they do not possess the traditional types of collateral which are normally required by financial institutions to finance their investment activities. As a consequence, their efforts at expanding their economic activity are undermined, because of lack of appropriate access to finance,” he outlined.
Dr. Tufton noted that last year, the Government had sought to provide some reprieve for farmers, with the introduction of the Financial Access for Responsible Members (FARM) programme. The initiative is intended to identify, through the extension services of the Rural Agricultural Development Authority (RADA), farmers who have a commitment to agriculture and are producing, and linking them to financial institutions, as well as purchasers and distributors of agricultural produce.
“What we have done and what we continue to do is to bring the critical members of the value chain together, and use moral suasion without any formal reporting structure, to say to the lender and the buyer, this farmer is a good bet, based on what we know. What this piece of legislation will allow, is for us to integrate these individuals into a network that allows that type of analysis to be more formalised and create an opportunity for those critical players in the productive sector,” Dr. Tufton told the House.
The Credit Reporting Bill allows for the sharing of credit information between specified financial institutions, and enable creditors to make better lending decisions. It also provides for the licensing and supervision of a Credit Bureau, and other connected matters.
The legislation will enable creditors to better manage risk and improve pricing of loans, once information is accurate and complete. Other benefits include the management of the information by the Credit Bureau, that will facilitate the improvement of credit risk management by financial institutions.