Digital lease agreements promote mechanization in Myanmar

In Myanmar, Rabo Partnerships provides technical assistance on digitization to Yoma Bank as part of an Agrifinance Program.

The unmatched agricultural potential of Myanmar has been severely challenged since the country opened its borders. How do we ensure that farming communities receive their fair share of the opportunities that arise when the economy opens up? At Rabo Partnerships we feel that the financial sector can play an important role by assisting farmers as they strive to scale-up and become more professional.

Private banks like Yoma were only recently allowed to expand and grow. Yoma’s ambition is to increase its loan portfolio to over USD 100 m by the end of 2019. It is targeting around USD 20 m to help agricultural equipment dealers provide farmers with financing deals to stimulate mechanization.

According to the FAO, sustainable mechanization can help to reduce poverty, achieve food security and improve people’s livelihoods. This is why Rabo Partnerships is keen to support this project.

“Since inception in 2016, over 6,000 units of agricultural equipment have been financed by the program and it has benefited over 86,000 rural families directly and indirectly through the use of rental services, increased mechanization and increased access to finance.”

Kalya Myint, Program Coordinator Yoma Bank

In some parts of Myanmar farmers still plow with oxen and in remote areas people have limited access to financial services. The lack of financial and logistics infrastructure and long travel times to cities mean that people still keep their savings under a mattress.

More professional farming, better yields

Yoma has developed several financial solutions for farmers including seasonal financing, input financing (for seed, fertilizer, cattle feed, etcetera) and a hire-purchase product that is entirely digital. This involves a form of leasing in which agrarian equipment is financed with a first-loss buffer provided by a donor fund with better conditions than normally available in the market. With improved yields some Yoma clients can now fully own a first tractor after only two years thanks to the hire-purchase solution. It changes the sector, as some farmers with tractors have developed into full agricultural contractors. They are no longer dependent on their own harvest but provide a service to other farmers. This is what makes people at Yoma tick: helping farmers to become more professional, produce more food and secure their livelihoods.