ISLAMABAD, June 14: The Asian Development Bank (ADB) here on Tuesday signed an agreement with Pakistani government for the provision of $31 million loan for the development of a competitive and sustainable agribusiness in Pakistan.

The loan had been approved by ADB Board in Manila last month. However, the agreement was signed here by Minfal Secretary Ismail Qureshi and ADB’s Country Director for Pakistan Marshuk Ali Shah.

The loan is being provided by the ADB’s concessional Asian Development Fund, carrying a 32-year term, including a grace period of eight years. Interest is set at one per cent per annum during the grace period and 1.5 per cent annually subsequently.

The project would establish market-based approaches to agribusiness development and enhance technical and managerial capacity in the sub-sector. It is aimed at dismantling barriers to entry for new enterprises and promoting the expansion of existing ones into new markets.

It would also revise and update the agribusiness regulatory framework and formulate a national agribusiness policy and provincial horticulture policies.

The project would focus on horticulture and hortibusiness, will take actions to improve the livestock and diary institutional framework and will support the selected enterprises.

About 2,000 agro-enterprises are expected to benefit from the agribusiness support and operations over the project life of five years. A handful of institutions are expected to develop dedicated agribusiness finance functions, which could benefit an additional 10,000 agro enterprises, including up to 12,500 farmer entrepreneurs, by improving access to finance and providing significant jobs and income generating opportunities.

Commercial agriculture and agribusiness development in the country are constrained by poor infrastructure, sector, institutions, policies and governance practises. Limited access to modern technology, financial and business development services further hampers development of this sub-sector.

Speaking on the occasion, the ADB country director said constraints faced by the agribusiness sector were present throughout the supply chain from input supply to processing and exports leading to low productivity and value added. There was a need for a comprehensive and systematic approach for removing these constraints to tap the huge potential growth opportunities provided by both domestic and international markets, he said.

To tackle these constraints, he said the project had five major components. The project would create agribusiness support fund to provide farmers, farmer groups and entrepreneurs with demand-driven technical and managerial services on a matching grant basis to improve their productivity, competitiveness and creditworthiness to access financing for their enterprises.

The project would increase access to agribusiness finance available from financial institutions to agro-enterprises.

Under the project capacity building would be provided for horticulture, hortibusiness and agribusiness. It is aimed at streamlining the collection and dissemination of market information, strengthening agribusiness technical training capacity, upgrading testing and certification facilities for seeds, nurseries and crops.