A diverse crowd of industry stakeholders gathered at the May 5 State of Smallholder Finance event to discuss findings from the landmark report, Inflection Point. 

Written by Malia Bachesta, Communications for Ag-Enterprise at the Global Development Incubator 

On May 5th, ICCO, the Initiative for Smallholder Finance (ISF), the Rabobank Foundation, and the Rural and Agricultural Finance Learning Lab, jointly hosted The State of Smallholder Finance event at the Embassy of the Netherlands in Washington D.C. Dutch Deputy Ambassador, Joanneke Balfoort and Chairman of ICCO, Marinus Verweij welcomed attendees, after which Dan Zook (Director of Investments, ISF) and Jason Wendle (Director, Learning Lab) presented a summary of findings and recommendations from the new report, Inflection Point: Unlocking Growth in the Era of Farmer Finance.

Following the presentation, Dan Zook led a panel discussion on specific implementation strategies and theories for Inflection Point’s three calls to action: progressive partnerships, customer centricity, and smart subsidy. Panelists included Camilla Nestor (Grameen Foundation), Frank Nagel (Rabobank), David Kamukama (ICCO), and David Hong (One Acre Fund). 

McKinley Sherrod

The panel’s discussion provoked engaging conversation with the audience and support for Inflection Point’s calls to action. Zook later shared, "We were very excited to see a diverse audience of stakeholders from across the sector present at this event. The engaging conversations around Inflection Point's call to action were hopeful indicators of future implementation, which will fuel a much needed shift in industry trajectory."

Discussion focused on how the smallholder finance industry can make actionable steps towards achieving the concepts outlined in Inflection Point.


Progressive partnerships: “Partnerships are center stage”

Dutch Deputy Ambassador, Joanneke Balfoort, set the framework of the event when she opened her welcome speech noting: “In Dutch policy, partnerships are center stage.” She shared that the purpose of the event was to bring together diverse individuals to meet and discuss mutual interests.

This tone is consistent the theme of progressive partnerships in Inflection Point.  The study highlights the critical need for more and better partnerships to shift the trajectory in smallholder finance. The panel discussed what these partnerships might look like in the industry. Specifically, panelists and participants explored collaboration between financial institutions and value chain actors. Panelists agreed with the study that such partnerships can enable cost and risk sharing, ultimately, reducing the need for direct subsidy of services and thus increasing smallholder financial access and reach.    


As an example of progressive partnership, One Acre Fund is in the early stages of testing an exciting new partnership with BRAC in Morogoro region, Tanzania. The partnership will develop a combined cash/kind loan that ensures smallholder farmers have access to high quality inputs as well as working capital.

Mike Warmington, Microfinance Partnerships Manager of One Acre Fund later commented, “as part of the partnership serving BRAC’s clients, One Acre Fund will manage the provision of inputs via local independent agrodealers and provide agricultural training to BRAC field staff enabling them to deliver key lessons in agricultural best practices to their clients.”

Customer centricity: “It’s not rocket science…”

Inflection Point recommends that financial service providers must fundamentally change how they engage with clients to better understand who their clients are and to design offerings and interactions that increase demand and reduce risk.

According to Frank Nagel, such engagement is “not rocket science but you have to tailor it [financial services] to the specific parties." Nagel noted that the industry often sees organizations trying to copy other successful agrifinance models, aiming to pull from one market to another and put things “on the fast track” or to “scale up.” However, Nagel says at Rabobank they found that, “when moving from one market to another, the ingredients mostly remain the same but the recipe should be different for each market, tailoring it to each specific party.”

Camilla Nestor noted that “banks often struggle to see their customers’ perspectives, however, when it comes to serving smallholder farmers effectively with financial services, this is exactly what is needed.” Concerted efforts toward a change in perspective can be successful:  For example, Nestor shared that following a recent field visit in Kenya, the COO of Grameen’s commercial bank partner, stated, “it’s not the farmer who needs to change, it’s us, the bank”.


Smart subsidies: Defining “smart subsidy” vs. “dumb subsidy”?

Toward the end of the panel discussion, Zook approached Inflection Point’s final call to action with good humor. He asked panelist to identify the difference between a “smart subsidy” and a “dumb subsidy.” Panelists agreed that smart subsidies need to be time bound, motivating, sparking exploration, and self-sustaining.

Embassy of the Netherlands

When asked to elaborate, David Kamukama of ICCO stated, “A smart subsidy is one that would address public good(s) and promote competitiveness, growth, efficiency and ensures sustainability.” On the other hand, Kamukama explained that a “dumb subsidy would be one that distorts the market, is unsustainable, and in effect causes a lack of competiveness in the market.”

For example, government entities often provide subsidies without any time boundaries. Panelists agreed that this has proven unsustainable because it requires an abundance of capital and time-related resources. Instead, governments make more impact when they foster an enabling environment for market providers and ensure basic infrastructure for providing financial solutions (or agricultural market access) is in place.

What we look forward to…

The State of Smallholder Finance successfully brought together sector stakeholders, forging new relationships, and sparking great conversation. The event further demonstrated the excitement and energy around smallholder finance and its potential for sector growth and impact. We are excited to see how stakeholders evolve their approaches as better understanding continues to fuel innovative conversations.


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