Despite the fact that some 58% of its population is involved in rural activities, Myanmar is lagging behind its neighboring countries when it comes to agricultural production. The most powerful explanation of Myanmar’s underdeveloped agricultural industry is a lack of sector financing. National and international organisations have not focused extensively on agricultural development, even though such development constitutes a first step in ensuring sustainable economic growth in Myanmar.
The financial products that are currently available on the market are not suitable for farmers and other actors in the agriculture value chain. Neither government actors, such as ministries and national banks, nor microfinance institutions and non-governmental organizations (NGOs) are currently developing financial products that aim to integrate actors in the value chain. This leaves a huge gap in agricultural development.
A well-integrated agriculture value chain, defined as the sequence of value-adding activities from production to consumption, through processing and commercialisation (APO, 2007), would bring economic and social benefits to all stakeholders involved. To effectively integrate the value chain, proper financial products are required. Since most of the financial products required to enable such a value chain to function are not available, the United Nations Capital Development Fund (UNCDF) has the opportunity to play a critical role in facilitating the introduction of such products to the market.
This paper highlights the problems related to agricultural finance in Myanmar and proposes a solution that will benefit everyone in the agriculture value chain, from farmers to regulating institutions, improving their role in the chain.
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