Loans guarantee small business success in Moldova

24 March 2010

In a small village in northern Moldova the farmers gather a poor corn harvest after a year without rain.

The lucky ones load the sacks in the wagon, while the rest bring them home on their backs.

Most of the adult population of the village have left to work abroad, where they can earn much more than the national average salary of €100 per month.

But Gheorghe and Aliona Panfil are different.

Driving around in a luxury car they proudly show off their agricultural business built from scratch.

“In total we own around 500 hectares of land and all our agricultural equipment”, says Gheorghe.

“We travel, we have a nice house, we can pay for our son’s education.”

The Panfils started buying the land that used to belong to a local kolkhoz (collective farm). They now own tractors and a harvester, also used by neighbouring farmers.

“In 2000 we had seven hectares on which we planted corn, rice and sunflower. After a year we had 87 hectares, but no equipment’ recalls Aliona.

“In Moldova, if you don’t have any equipment, it is not even worth to think of doing something in agriculture.”

George saw a DFID-funded TV advert about help and financial support for entrepreneurs wanting to start up or extend their business through Garantinvest, a loan guarantee fund.

The couple took out a $10,000 loan through the scheme to buy essential equipment.

Both Gheorghe and Aliona have also benefited from training and study visits to farms in Europe, through the DFID-funded Support to Rural Investment and Services Project (SRISP), to help move their business forward.

Project manager, Viorel Gherciu, has hundreds of similar success stories.
Between 2002 and 2006, we supported nearly 1,300 entrepreneurs and created more than 6,000 new jobs.

Almost 5,000 farmers have received business training. They have learned how to manage their businesses, how to plan their activity and we hope that they can now offer this support to their colleagues.”

Facts and stats

• DFID has provided £2.58 million to the SRISP.
• SRISP works on improving rural livelihoods in five ways: rural business development, improving access to seasonal credits, introducing appropriate income raising agricultural technologies, social development initiatives, and securing rural citizens’ legal rights to their newly acquired land and property shares.
• It works by providing business environment where individual, group and community rural development initiatives can be established, sustained and grow.  It has also given support to businesses and additional resources to participating service providers, most of which were women.
• Working in tandem with the World Bank, the project supported increased rural incomes and improved livelihoods by promoting rural entrepreneurship, agricultural production, economic diversification, and trade in rural areas. Specifically, it set up effective, self-owned and sustainable business to support the livelihoods of rural citizens and communities.
• Between 2002-2006, the project helped create 1251 rural businesses and 6181 jobs, mostly in agriculture.
• It also saw an expansion of the community-based microfinance project network to 100 communities, and led to the creation of 107 saving and credit associations.
• 1148 rural businesses received credits totalling $16million; entrepreneurs received 26,969 consultations from specialists and 4,934 farmers attended seminars and trainings organized during the project.
• In Moldova, the poorest country in Europe, over 70% of people live in small towns and rural areas, where poverty rates are the highest.
  

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