Press Release

OFID and Armenia sign US$10 million loan agreement to help boost rural development

01/2007 January 17, 2007 Vienna, Austria
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The OPEC Fund for International Development (OFID) has signed a loan agreement for US$10 million with the Republic of Armenia. This is the second time OFID has extended funding to help strengthen the country’s rural development sector.

After signing the agreement, HE Mr. Davit Lokyan, Minister of Agriculture of Armenia, thanked OFID for its support, and declared that the fresh financing “will do much to close the economic gap between urban and rural populations”. In his remark, OFID Director-General, Mr. Suleiman J. Al-Herbish, assured the Minister of the institution’s ongoing support to Armenia, adding that OFID “enjoys an excellent working relationship” with the country and that he looked forward to discussing future development opportunities.

Armenia’s agriculture sector is based almost entirely on smallholder subsistence farming, with an average land holding of just 1.4 ha. Many farmers have little or no technical knowledge or skills and are dependent on outdated machinery and irrigation equipment.

To address this situation and encourage the development of a more market-oriented rural economy, government is investing heavily in strategies that create an enabling environment for the establishment of on- and off-farm rural enterprises.

This project aims to stimulate private sector development and commercial opportunity, by tackling the infrastructure constraints that prevent rural dwellers from engaging in productive and profitable activity. Sub-projects may be proposed by the likes of village councils, producers’ associations or farmers’ interest groups, and will include public infrastructure such as irrigation systems, local roads and bridges, livestock, water systems, fresh water supplies and the natural gas network.

On completion, the project is expected to diversify and raise rural productivity, increase incomes and generate considerable employment opportunities.