Positioning local banks for success in smallholder financeDecember 18, 2013 by Sally Farhat Kassab
The Initiative for Smallholder Finance’s second briefing document, “A roadmap for growth: Positioning local banks for success in smallholder finance,” was published today. This briefing follows up on our first briefing in a series of knowledge products that will continue over the next few months. Here’s an excerpt of a blog about it by Tom Carroll of Dalberg:
“‘This demands action!’
That’s what we thought as we finished writing a report called “Catalyzing Smallholder Agricultural Finance,” authored in 2012 by Dalberg Global Development Advisors with support from the Citi and Skoll Foundations. Before the report, global development players of all stripes recognized smallholder farmers’ critical role in meeting the global demand for food and serving as stewards of vulnerable natural resources. Most also knew that the 450 million smallholders are a core component in pulling developing countries out of poverty, with large numbers of the world’s poorest people living in households dependent on agriculture for their livelihood.
Yet, despite recognizing smallholders’ importance, many did not fully comprehend the significant unmet demand for smallholder access to finance. Nor did they fully understand what efforts were underway, and more importantly, what more could be done with focused resources. The report paired its most startling finding – that only 2 percent of the estimated $450 billion global demand for smallholder financing is met by formal institutions – with guidelines for five strategic pathways that can most rapidly meet this demand.
Our interviews with players already involved in the sector, including banks, investors, donors, NGOs, and companies made us realize that, while there are many excellent efforts underway, making a serious dent in the financing gap would require a more structured approach. The report generated substantial interest. Sources such as AgriFin and NextBillion reported on the new findings, and groups from multinational corporations to regional banks expressed a desire to dig deeper into our research.”