The horticultural sector (fruits and nuts) in Moldova provides employment for some 250,000 people across the country (i.e. around 10% of the active population) and thus is an important economic factor in the country. However, the sector is not very competitive and needs to be substantially modernised. In line with the ‘Moldova Agriculture and Rural Development Strategy 2014-2020’, the government has acknowledged the importance of implementing agriculture and rural development policies in order to diversify employment opportunities, to recreate a sense of community and to strengthen the capacities of the rural communities to develop and implement local development strategies.
There are, however, a large number of barriers to access funding for local entrepreneurs active in or entering the sector, especially the smaller ones, women in businesses and young farmers. They include the financial intermediaries having a lack of understanding about the sector, which leads to requests for excessive collateral; difficulties faced by the young farmers to access commercial loans due to their inability to prepare the back-up documentation required; and some young farmers being asked for more collateral than others as they were seen as a ‘high-risk category’.
Against this backdrop, the project aims to provide support to the horticulture subsector of Moldova by pursuing three main objectives. The first is to support the modernisation process throughout the entire value chain. The second is to provide wider access to finance via intermediary banks. The third is to support access to international trade by local participants. Projects falling within the scope of the programme include upgrading the value chain in the horticultural sector (e.g. fresh and dried fruits, and nuts). The programme also supports sector-specific research and training, modernisation and creation of new tree plantations, equipment for improving resource efficiency and quality in production, harvest, post-harvest and processing and logistics (e.g. storage facilities; sorting; packaging; labelling and grading; and transport), including measures to improve their energy efficiency.
In order to facilitate small and medium sized enterprises’ (SMEs) access to financing, a partial portfolio guarantee (as part of the investment grant) will be available to the qualifying local banks participating in the EIB programme so as to allow them to increase their lending while taking on more risk on their balance sheets and extend their products to undeserved segments of the economy. The mechanism envisaged would prevent misuse by the final beneficiaries as the guarantee will be capped as a percentage and would be modulated depending on individual circumstances. Adequate technical assistance measures in capacity building, finance risk training, preparation of bankable dossiers, improvements in accounting standards and raising the quality standards of goods produced for EU markets will enhance institutional knowhow and improve the consumption patterns of consumers (locally and internationally).
The EU grant will contribute to increasing implementation and management capacity in the horticultural sector. The NIF contribution is expected to generate investments worth some €300 million in SMEs.