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The Multi Sector Support
Programme (MSSP) was a development programme of the Ministry of
Agriculture and Land Reclamation (MoALR) which was funded by the European
Commission (EC). It was set up to provide credit facilities from a Credit
Line for the development of private sector farms and agricultural
enterprises. MSSP was a sub-programme of the Agriculture Sector
Development Programme (ASDP), which together with the Food Sector
Development Programme II (FSDP) was funded under the EC’s Fourth
Protocol on Financial and Technical Cooperation and the initial Financing
Memorandum (FM), No. 21/EG, was signed in Brussels on 16 April 1996. In
January 2002 the EC and MoALR agreed to a two-year extension of the FM
until 30 April 2004. The total funding consequently made available for
MSSP was €63.53 million, including €55 million for the credit line and
the balance for running the Project Management Unit (PMU) (€2.86m) and
the provision of supporting technical assistance (€5.67m).
The overall
objectives of MSSP were to increase income and job opportunities in the
rural areas and to increase food production, for both the local and export
markets, through the provision of financial and technical support to
farmers and agricultural entrepreneurs who are involved in production,
processing and marketing activities.
Implementation of the initial five year Programme
commenced in July 1996 with Technical Assistance provided by Vakakis
International S.A. (GR) supported by Atkins International (UK). The PMU
offices were located in Dokki close to MoALR.
When fully operational
MSSP provided loans to farmers and agricultural entrepreneurs, all over
Egypt, for investment in various aspects of production, processing and
marketing operations within the four distinct sectors supported by the
Programme, viz.: Aquaculture;
Horticulture; Poultry and; ‘on farm’ Irrigation and Drainage
development. The target groups of MSSP loans were all farmers and
agricultural entrepreneurs, including women, within the four sectors, with
particular regard to small and medium scale farmers.
The MSSP Credit Line funds
were managed by an Agent Bank, the Commercial International Bank (CIB),
working together with eleven ‘Participating Banks’ who received and
verified loan applications from potential investors in the four sectors
before submitting them to the Programme’s Board of Trustees via the PMU
for approval. The first loans were approved in November 1997 and by the
end of March 2004, 546 loans had been approved totalling nearly LE 326
million, equivalent to 146.7 % of the original Credit Line funds. The 546
projects financed by MSSP loans supported 22,247 direct beneficiaries and
led to the creation of some 15,000 jobs. As the loans were repaid the
principal and interest was credited to a “Revolving Fund” which
continues to be used in a perpetual way to grant further loans to farmers
and agricultural entrepreneurs.
The
Programme led to the creation of a system of agricultural credit, which
was supervised by a Board of Trustees (BoT) comprising government
authorities in collaboration with representatives from the private
production and banking sectors. This resulted in a system that not only
enabled a large amount of funds to be channelled and operated at the risk
of the commercial banking sector under the control of an exogenous body,
the BoT, but also ensured that the funds were allocated to the designated
sectors of the Programme.
In view of the positive results of both MSSP and FSDP the extension
agreed by the Government of Egypt and the EC in January 2002, provided a
two year phasing out or transitional period to 30 April 2004 with the
primary objective of securing sustainability of the MSSP and FSDP credit
schemes through the establishment and operation of a common independent
institutional structure, the Fund Management Unit (FMU). This was to
ensure:
· that full benefit
was obtained from systems and practices put in place since MSSP started
and also allow dissemination
of the Programme’s most significant results;
· that sufficient
time was allowed for the newly established FMU to mature so that the MSSP
credit line could be smoothly
merged with the FSDP credit line under the overall management of the FMU.
A further objective was to secure the
sustainability of MSSP technical expertise by making it available through
various organisations and institutions, in each of the four sectors, so
that this expertise could be retained for use in the future under the
direction of the FMU.
During the
final two years the PMUs of MSSP and FSDP worked closely together with CIB
on the merger of the two Sub-Programmes into the Agricultural Sector
Development Programme. This involved the gradual handover of the
responsibility for many of the activities previously undertaken by the
PMUs to the FMU that had been established within the Agent Bank.
At the end of March 2004
the FMU continued the activities of loan disbursement, identification of
loan arrears, financial monitoring and fund investment. It had also taken
over responsibility for the additional financial monitoring activities
previously carried out by the PMU as well as some Programme promotion
activities and provision of the Secretariat to the Board of Trustees. From
the end of March 2004 the FMU took over full responsibility for the
technical evaluations of loan applications, post loan monitoring and loan
impact assessment. It was anticipated that only limited loan monitoring
activities would be carried out by FMU in house staff whilst most would be
contracted in through agreements mainly with affiliated institutes of the
Agricultural Research Centre and to a lesser extent by individual experts.
The system of loan application, approval and disbursement which was
established by MSSP should not change significantly.
At the end of March 2004, the mean loan size was
LE 596,581 and the number of beneficiaries stood at 22,247. A breakdown of
the allocation of loans between the different sectors is shown below. A
cumulative total of 106 loans totalling LE 24.2 million had been disbursed
to agricultural cooperatives and associations. Some 83 per cent of the
loan numbers and 24 per cent of the total amount of loans approved was
disbursed to small and medium scale farmers including cooperatives.
Sector Allocations for Approved Loans
In
addition to the credit line activities the PMU implemented over 150
training courses for some 4,500 farmers, cooperative members and
Participating Bank branch managers and credit officers. The Programme also
provided Institutional Support to several leading Farmers’ Associations
at both National and District levels and 14 Demonstration Activities were
established on farms owned by Credit Line Beneficiaries.
During the final four months of the Programme the
PMU concluded closedown arrangements and the handover of all PMU assets
including; vehicles, office equipment, furniture and fittings to MoALR.
Key original financial documents and reports were also handed over to
MoALR whilst all remaining promotional materials were handed over to the
FMU.
The ASDP Credit Line Fund was handed over to MoALR at
the end of April 2004 with the agreement by MoALR that the funds will
continue to be utilised for the purpose for which they were originally
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