Burundi has signed a deal with the International Fund for Agricultural Development (IFAD) that will see vulnerable groups including women and youth access financial services.
The project, dubbed Financial Inclusion in Burundi (PAIFAIR-B), will cost $28.6 million and targets more than 99,000 households in rural areas.
IFAD will provide $24.9 million in form of a grant, while Bujumbura and the beneficiaries will contribute the remaining amount.
The deal was signed in Rome recently by IFAD’s president Gilbert F Houngbo and Burundi’s Minister of Finance, Budget and Privatisation Phil Domitien Ndihokubwayo.
The PAIFAIR-B deal adds to the list of IFAD-funded rural development programmes in Burundi, where the United Nations agency has invested more than $230 million since 1979.
“The project will be rolled out in 17 provinces, and is designed to provide access to financial and other diversified services in order to foster the emergence of a wide range of income-generating enterprises in the agricultural and non-agricultural sectors,” IFAD said.
The demand for financial services in Burundi exceeds the supply, with the majority of agricultural entrepreneurs forced to turn to “loan sharks” who charge exorbitant interest rates of up to 1,000 per cent.
A 2014 report by the global partnership for Financial Inclusion notes that only 12.5 per cent of the country’s adult population have an account in a formal financial institution.
The study blamed the low financial inclusion in the country on lower incomes and financial education and barriers such as lack of motorised transport outside the city of Bujumbura.
Decades of civil wars coupled with a fragile political process and recurrent climatic shocks have slowed economic activity in Burundi, consistently keeping economic growth in the country at below five per cent between 2006 and 2016.
More than 400,000 people had fled the country as at mid-September, according to the UN High Commissioner for Refugees (UNHCR), while at least three million Burundians — nearly a quarter of the country’s population — were in need of humanitarian assistance as at January this year.