Warrantage in Niger:
Adaptations for a developing country
Emilio Hernandez
Agricultural Finance Officer
FAO/AGS
20 September 2012

Introduction:
• GDP per capita is USD 800
• 43.6% of population below
USD1.25/day
• Exports go to Nigeria (68.3%);
USA (12.2%) and Ghana (9.8)
• Paved roads coverage 3,912 Km
• 39% of GDP is agriculture, with sorghum and millet as staples
• Government-owned fertilizer monopoly
Source: WFP, 2009

Warrantage systems:
Source: Adapted from LeCoutois and Olofsson, 2010

Warrantage systems:
1. All of the 132 MFIs in the country offer warrantage products
2. In 2009 it represented roughly 8% of their portfolio value
3. Repayment rates are above 97%
4. In 2004 there were 104,741 clients; rural penetration rate of warrantage estimated at
5.3% (up from 3% in 2001)
Source: The MIX, 2012 and LeCoutois and Olofsson, 2010

Why does warrantage work in Niger?
Source: Afrique Verte International, 2010 and the author

Why does warrantage work in Niger?
• 68% of exports go to
Nigeria, most of them consisting of millet, sorghum and onion surpluses
• Nigeria as a net importer of cereal and having higher purchasing power absorbs any surplus
Niger is able to produce

Why does warrantage work in Niger?
 The constant demand for cereal imports from neighboring Nigeria has created stable business opportunities for farmers in Niger
 Through their organizations , farmers have worked steadily to benefit from these opportunities by building storage facilities and making joint loan requests backed by cereal stocks

Why does warrantage work in Niger?
 Understanding cereal markets enable
MFIs to accept stocks as collateral, given their ability to liquidate it in case of default
 The character-based assessment of creditworthiness, enables
MFIs to lend to producer organizations under a weak contract enforcement framework

How do agricultural households use warrantage credit?
 Households use loans to finance trading and marginally for vegetable production . Very rarely is the loan used to purchase agricultural inputs for the main staples
 These short-term activities enable the generation of cash while cereal prices improve and revenues are used to pay the loan
 From 2001-2010, a sample of 34 POs shows cereal price differentials were superior to principal, interest and fees in 71% of the cases

 The combination of stable agribusiness opportunities, strong farmer organizations and lenders familiar with agricultural markets that makes warrantage work in the country
 The core business condition is not easy to replicate by governments and development agencies in other contexts
 It is key that interventions recognize this condition to support warrantage initiatives led by local farmers, traders and lenders