The success of the Financial Services Association and Community Bank models introduced in the country through the National Programme Coordinating Unit (NPCU) of the Ministry of Agriculture has alerted central government and moves are now being made to adopt it as a premier development model for rural finance in the country.
Reports made available to this medium indicate that the Government’s Financial Sector Development Plan (FSDP) now lays central emphasis on FSAs as leading rural financial service providers; giving rise to the suggestions that its adoption by government is now imminent. Additional information made available also alerts that the Bank of Sierra Leone (Central Bank) is working to bring FSAs under the ambit of regulation to better supervise and integrate the model into the overall formal financial sector.
The success of NPCU A and Community Bank models and its innovative approach to rural financing has had a major influence in rural finance in the country; a showcasing the relevancy of the current IFAD supported Rural Finance and Community Improvement Programme (RFCIP) in national development mainstreaming.
In recognition of the importance of this rural development initiative, the Government of Sierra Leone has also taken further measures to institutionalize FSAs (and Community Banks), as evident in the Smallholder Commercialization Programme, the flagship programme for articulation and implementation of the Comprehensive Africa Agriculture Development Programme (CAADP).
Inarguably, the NPCU FSA model in Sierra Leone has recorded a huge success story. Through the IFAD RFCIP, over 68 FSAs and Community Banks have been put into servicing the country’s rural poor. As a result, other donors, through MAFFS, have also invested in the FSAs and Community Bank setup in Sierra Leone; bringing a wide range of flexible financial dynamics into rural finance in the country.
Credit creation: Based on the success of the pilot FSAs, more FSAs and CBs have been established in Sierra Leone and with the news government’s rekindled interest, it is expected that credit facility will be more easily accessible and affordable for the rural poor.
More competitive markets: it is no gain say that prior to the introduction of FSAs, farmers had limited sources for financial borrowing, often paying extremely high interest rates to money lenders and other players in the industry. The initiation of the FSA project in Sierra Leone has offered financial services at more competitive market rates, facilitating checks and balances in the industry.
Savings culture instilled: Through community sensitization and building trust, there is significant evidence of many people/ farmers adopting a savings culture, depositing their savings for safe keeping in these rural financial institutions.
Employment creation: Nearly 200 youth (female and male) directly employed in over 60 FSAs. A further 200 jobs have been created with additional IFAD financing to the rural financial sector, notably in Community Banks and in the Technical Assistance Agency (TAA), created to provide support to FSAs and CBs.
Enhanced financial linkages: A key objective of establishing FSAs and CBs in Sierra Leone is to link them up with the formal financial sector in the country. To date, farmers and other clients in rural areas are able to access remittances (both locally and internationally), through money transfer facilities that include Western Union, interbank transfers and mobile phone money transfers.
Improved infrastructure: With the initiation of these grassroots financial institutions, targeted communities have also benefited from improvements including feeder roads and their maintenance, security, and mobile phone network coverage in FSA/CB situated areas.