Agriculture

Agriculture accounts for the lion’s share of Moldova's economy and, after 1990, the country carried out one of the most ambitious agricultural reform programs among the countries the former Soviet Union. However, it could not avoid a crisis in the sector. The once large farms were destroyed and their agricultural equipment became outdated. Expensive, and short duration bank credits limited the new private farmers' access to financing. As a result, the sector was starved of resources and productivity plunged. 

Through its Rural Investment and Services Project, the World Bank is encouraging growth in the sector by ensuring that the new private farmers and rural entrepreneurs have access to modern knowledge and experience, as welll as to adequate financing.

Rural Investment and Services Project 

Objective

At the request of the Government of Moldova, the World Bank approved its Rural Investment and Services Project in September 2000. The project aimed to encourage growth, increase productivity and raise incomes in the countryside by ensuring that the new private farmers and rural entrepreneurs had access to modern knowledge and experience, as well as to adequate financing. It also aimed to promote entrepreneurship and encourage the development of non-agricultural businesses in the villages. It also aimed to develop a transparent and effective network of consulting services for agricultural producers.

The total value of the project is $ 44 million, with a first stage of $20 million. In August 2002, a 10.5-million-dollar credit line of the US International Development Association became available, and this cleared the way for financing by financial structures of Great Britain (DFID) and Sweden (SIDA).

Results

Regional extension centers provide advice and loans

Under the project, 35 regional extension centers have already been created, with the support of the World Bank, other donors as well as the beneficiaries. These centers are manned by about 400 consultants in the villages. These centers form part of a private, national, and decentralized network of rural extension services providers. Annually, these centers will  give more than 1 million consultations where information, technology, knowledge and know-how is given to farmers and rural entrepreneurs. At present, there are more than 10 mobile teams of experts who are ready to provide assistance about how to start a new business, develop a business plan and obtain financing for it. In addition, for the first time after Moldova gained independence in 1991, loans are given to small entrepreneurs for up to 15 years.

Under the project, more than 320,000 farmers, or one out of every three land owners in Moldova has benefited from free consultations in agriculture, technology, economics, and legal assistance. They have increased their incomes and improved the quality of life of their families. With the support of 20 teams of development experts, 818 business plans were worked out and 471 businesses were started which created over 2,500 new jobs.

More than 400 investment credits and about 500 loans have been offered to the savings-crediting associations of citizens totalling about $15 million under an interest rate much lower than those existing on the crediting market. The loans were given to farmers and rural entrepreneurs through the banks Moldova Agroindbank, Moldinconbank, Victoriabank, Finance and Commerce Bank, Banca Sociala and the Rural Financing Corporation.

Although the first stage of the RISP was planned to continue until 2006, the objectives were achieved by the end of 2003.

Supplemental Rural Investment and Services Project

In early 2004, Moldova asked the World Bank to supplement the Rural Investment and Services Project. The results achieved in the first RISP led the World Bank to grant a 5-million-dollar supplementary credit that aims to start up 300 new businesses, with loans being given for up to 15 years.

Total cost of the project: $ 47.68 million Phase I: $ 25.68 million Moldovan Government: $ 1.19 million World Bank's International Development Association: $ 15.5 million (Including supplement $ 5 million British Department for International Development: $ 2.49 million International Development: $ 1 million EU TACIS: $ 0.5 million Participating Financial Institutions: $ 1.75 million Beneficiaries: $ 1.05 million Phase II: $ 22 million International Development Association: $ 14.5 million Government and others (to be identified): $ 7.5 million Status: In force since 31 August 2002 Implementation agency – Consolidated unit for implementation and monitoring of projects in agriculture. Director General: Igor Gorashov (tel/fax: 223-106) Project Manager: Liviu Gumovschi (tel/fax: 244-469, 221-142)