Review of Myanmar policies related to agricultural value chain finance

Project Active from to Firms and Farms

This project aims to increase understanding of the policy context and the potential to make policy reforms to increase formal agricultural value chain financing in Myanmar, by producing a report with policy recommendations. Inadequate access to finance can stifle the productivity and growth of agriculture, which is especially pertinent in the case of a country where about 70% of the population lives in rural areas, with the majority engaged in the sector, as in Myanmar. Indeed, the country’s potential agricultural credit market has been estimated at USD 4.6 billion, compared with approximately USD 295 million of actual formal agricultural lending at present.

This gap also represents a significant market opportunity for commercial lenders, who are, for the most part, absent from the sector. Less than 2% of commercial bank loans go primarily to the agriculture sector. In general, agriculture is perceived as a risky sector to lend to, and is also often difficult to monitor. However, the distortionary role of the Myanma Agricultural Development Bank and certain aspects of the policy environment, including banking and financial regulations, may have served as a further deterrent. This project, by drawing on both secondary research as well as in-depth interviews with key stakeholders, looks to identify these policy constraints and formulate actionable and context-appropriate policy recommendations to stimulate agricultural value chain finance.

This review also serves as a first step towards designing innovative and inclusive agricultural value chain financing models for the country. It provides a policy-focused contribution, alongside other report materials that are being produced, including sections on global best practices, the current state of agriculture and agricultural finance in Myanmar, an assessment of value chain opportunities, and an assessment of potential research on agricultural value chains in Myanmar. The policy review forms a standalone IGC knowledge product.