Maha Agriculture Microfinance drives more loans for Myanmar farmers through new funding agreement
Myanmar Awba Group’s subsidiary – Maha Agriculture Microfinance – signed a MMK 3.5 billion (USD 2.6 million) funding agreement with Yoma Bank last month. The agreement will provide more funding for Maha Agriculture Microfinance, which enables it to offer microloans to an additional 6,000 farmers and their families.
Farmers in Myanmar are a community which has been underserved by formal financial institutions. With 70 percent of the country’s labour force in the agriculture industry, it is essential for these farmer communities to have access to credible moneylenders. The current lack of access to formal financing drives them to borrow from informal moneylenders with high-interest rates, reducing any profits they make from their harvests.
Under the agreement with Yoma Bank, Maha Agriculture Microfinance can access wholesale funding without conventional collateral requirements of land and buildings. This, in turn, lowers the barrier to microloans which do not require high collaterals from farmers and micro-enterprises. The increased accessibility to microloans have a trickle-down effect, helping more of these families and communities finance their business activities without having to bear high-interest rates, a factor which has a significant adverse impact on future earnings.
Reducing poverty among farmers through more accessible microfinance
Maha Agriculture Microfinance currently services 10,000 farmers across Myanmar, with an aggregate loan book of MMK 7 billion (USD 5.3 million). The loans it offers provide needed capital for farmers and micro enterprises to support their farming and micro business activities. These activities include buying fertilisers, seeds, and agricultural inputs to increase their productivity, crop yields, and income.
In the long run, Maha Agriculture Microfinance and Myanma Awba Group believe that microfinance will be critical to reducing poverty in Myanmar.