10 Jun 2014
ISF Advisors

The fourth briefing note in a series from the Initiative for Smallholder Finance reflects on the role of capital markets within the context of historical agricultural sector development.

Governments often directly shape the development of agricultural finance systems as they evolve. This research uses historical evidence from three advanced economies – Germany, the United States, and South Korea – to highlight policy considerations that will affect the growth of agricultural finance in today’s developing markets, where many of the world’s 450 million smallholder farmers live.

While there is no one-size-fits-all approach to agricultural finance policymaking, this analysis shows that systems have most effectively met agricultural sectors’ needs when governments carefully designed policies to enhance rather than replace credit provided to farmers by private actors.

 

27 Mar 2014
ISF Advisors

The third in the ISF briefing note series, this briefing note takes stock of the existing landscape of smallholder impact and risk measurement and devises tools and suggestions to align these efforts for greater future impact. Additionally, this post includes a universal theory of change for smallholder finance, smallholder impact literature review, and an interactive Prezi map of the current smallholder impact and risk assesment tools. 

Impact and risk metrics play an important role in efforts by investors, technical assistance providers, certification bodies, and corporations to close the over $400 billion gap between demand for and supply of finance to smallholder farmers.

Metrics can help demonstrate industry impact, improve operating efficiency, and foster collaboration on industry infrastructure to grow the market. A well-implemented metrics strategy can also help to mitigate reputational risks arising from unintended effects on farmers and their families, communities, or ecosystems.

But the current landscape of...

18 Dec 2013
ISF Advisors

This briefing is the second in a series by the Initiative for Smallholder Finance. Read this note to explore what is required for a healthy, competitive smallholder banking sector, and investment opportunities for public and commercial funders seeking to support smallholders.

Local bank lending fails to meet 97% of smallholder demand for financing. To support growth for smallholder farmers, banks must lend at affordable rates, design financial products more appropriately for farmers, and improve accessibility of financial institutions to smallholders. Banks serving rural and agricultural clients could evolve in a more competitive direction marked by greater product and service innovation. In order to make strides towards closing this gap in financing, public and commercial investors can allocate capital to the banks and financial institutions that have the capabilities to grow and innovate.

 

This briefing’s analysis begins with an overview of the characteristics and capabilities of banks that are well positioned to serve smallholder farmers. Next, the briefing breaks banks into four archetypes, including an assessment of how effectively each archetype serves smallholders. This document also assesses each archetype on its attractiveness to public or commercial investors.