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Guaranteeing credit and food security in niger
| Project | Location | Funding Level | Funding Period |
| EDP Warrantage Project | Maradi District, Niger | $192,000 | FY 2004-2008 |
ADF's support for EDP's warrantage system provides Nigerien cereal farmers in Maradi District with access to credit facilities and more options for earning income during Niger's dry season.
The United Nations Development Program’s 2004 Human Development Report ranks Niger as the world’s second-poorest nation. Most of its 11 million citizens live in semi-arid grasslands and survive on subsistence cultivation of millet, sorghum, and other drought-resistant grains.
Wild annual fluctuations in basic commodity prices have forced many of Niger’s farming families into chronic debt. Producers living near the subsistence level must often sell their yields in August and September, the peak months of the harvest season, when local markets are flooded with grain and prices are extremely low. These farmers must then purchase additional food supplies in the “hungry months” of June and July when food is scarce and commodities traders charge exorbitant prices.
To help local communities develop new routes to food security, ADF has funded cereal bank initiatives in Niger that allow small growers to buy and sell grain at favorable rates through warehouses that are situated in local communities and owned and operated by community-based organizations. Now ADF is helping Eco-Développement Participatif (EDP) transform warehouses in the Maradi District into banks of another sort: locally sustainable credit-lending institutions.
EDP is implementing an innovative “warrantage” system that allows farmers affiliated with a community-based organization (CBO) to store portions of their annual yields at warehouses based in their home villages. These reserves then serve as collateral on cash loans that farmers use to finance income-generating activities during Niger's seven-month dry season. The farmers can also withdraw and consume or sell their deposits toward the end of the seven-month term, which coincides with the peak period of the annual price cycle.
The sustainability of the EDP warrantage model is guaranteed by a fair but effective credit management process. If a farmer defaults on a loan, the CBO will sell his or her harvest to recoup its loss, and it will return any surplus from the sale to the producer. This system helps prevent spiraling cycles of debt and dependency that have historically forced many families into highly exploitative relationships with private creditors.
Farmers participating in the loan program often purchase animal feed to fatten their goat and cattle herds, an activity that allows them to sell meat to local markets and generate more milk and butter for family consumption. Others use their loans to purchase and sell processed goods or open informal restaurants and coffee kiosks in local towns.
With ADF funds, EDP will finance the construction and equipment of 16 new village warehouses in rural villages across Maradi and provide 32 village-based CBOs with the resources and training they need to operate viable revolving-credit programs. Revenues generated by these ADF-supported revolving-credit institutions will allow EDP to develop four additional warehouse and eight additional CBOs over the span of the five-year project.
The specific goal of the EDP warrantage project is to provide 900 Maradi-area farmers with sustainable access to credit. But ADF’s ultimate objective is to produce a financially sustainable warrantage model that will help local organizations like EDP become independent catalysts for the development of profitable, community-based credit networks.
ADF’s Niger partner organization, Actions for Sustainable Integrated Grassroots Development (ADIDB), will conduct “train-the-trainer” seminars with EDP staff that will help EDP provide village-based CBOs with essential skills in management and bookkeeping, monitoring and assessment, credit management, and effective management of group dynamics.
EDP is a registered Niger NGO that has sponsored economic development and natural resource management projects in Maradi District since 1996. Its founders have extensive development experience through work with the Government of Niger in implementing rural development programs funded by the United Nations Development Program (UNDP) and the United Nations Food and Agriculture Organization (FAO).