Karandaaz Pakistan, following its mandate of promoting access to finance for micro, small and medium-sized businesses through a double bottom line investment platform, announced an equity investment of PKR 600 million in National Rural Support Programme (NRSP)’s subsidiary Agriculture Processing Company Limited (APCL). This investment will help APCL scale up warehousing, financial inclusion, and the incidence of rural industrialization, particularly for small-holding farmers.
Speaking about the vision behind setting up the facility, Dr. Rashid Bajwa, Chairman NRSP APCL explained, “Pakistan employs 45% of its labor force in agriculture but agriculture’s share in GDP remains a mere 21%. This is because major crops are mostly produced by subsistence farmers with low yield. Low yields are associated with a vicious sort of generational bondage relationship between small farmers and Aartis (whole sellers) who often charge hidden / high interest rates on in kind financing of unbranded and low-quality input supplies, compelling farmers to make distress sales at low prices.
Speaking about the significance of Karandaaz investment in APCL, Mr. Navid Goraya, Chief Investment Officer, Karandaaz said, “Issue of timely, easy, and favorable access to finance is a big constraint for small farmers. Warehouse receipt financing is a novel instrument in Pakistan’s context that has the potential to thread small farmers, processors, and the financial sector; enabling them to earn financial and social returns that have been previously nonexistent in agricultural value chains.
Karandaaz is the implementation partner of the Enterprise and Asset Growth Programme (EAGR) of the UK’s Foreign, Commonwealth & Development Office (FCDO) with a mandate to improve access to appropriate financial services for micro, small and medium enterprises and translating this into higher economic benefits for state, poor, and marginalised groups, in Pakistan. Explaining the reasons for Karandaaz to partner with NRSP APCL, Mr. Waqas ul Hasan, CEO Karandaaz said, “Eighty (80%) of the world’s poor live in rural areas and work mainly in farming. This important agricultural infrastructure set up by NRSP to provide storage, process, and warehouse receipt finance facility is playing the role of a game changer for rice growers of the region and helping transition them to be formalized agri-businesses and we are happy to be their partners in this.
Currently, major crops in Pakistan, including cotton, sugarcane, rice, maize and wheat have an annual yield of greater than a million tonnes. However, Pakistan lacks sufficient infrastructure for post-harvest treatments, preservation of quality, storage, and access to financing for small holders; all required to ensure that the agricultural sector is cleaned of lingering inefficiencies particularly affecting small farmers. The model that Karandaaz and NRSP APCL has set up can be adapted in any agricultural value chain including livestock so that smaller farmers can reap greater rewards.