Presentation by Mr. Abdus Sobhan of Krishibank, Bangladesh

Excerpts from remarks by Mr. Abdus Sobhan of Krishibank, Bangladesh

The journey of microfinance is not hazardless and without setbacks. Over time, microfinance has been facing the challenges of sluggishness, poor management, and financing quality. The main challenges in microfinance are to further improve the enabling policy environment, build an adequate retail capacity to provide a broad range of services in demand among the farmers, and the reduction of transaction costs.

We know that microfinance, especially microcredit, deals with the off-farm activities as a tool of its poverty alleviation program. On-farm and allied agricultural activities are generally overlooked as in the case of Bangladesh mainly due to the unpredictability of returns in this sector.

Microfinance technologies in existing forms cannot be introduced to agriculture. Innovations are needed. To address the challenges, different stakeholders should devise policies suitable for extending microfinance to poor farmers. For that, the following must take place:
1. Initiatives that bring together diverse stakeholders
2. Financially strong & professionally managed apex development financial institutions
3. Active partnership with farmers' organizations
4. Strong public policies
5. Establishing public-private partnerships and a government - NGO network.

We are now in a global food crisis with high market prices. The crisis is must biggger with many challenges for the Asia-Pacific region. We must provide our own food security and there is no way for higher production to gain that security. This security requires, among other things, the financing of farming activities to boost production. Therefore, the sooner we can devise ways to introduct microfinance in agriculture, the better.