Learning Lab develops new database of Smallholder Financial Solutions that illustrates what's offered today

Published on

September 25, 2015

The Learning Lab in collaboration with Dalberg Research have built a database of existing financial solutions for smallholder farmers. This database will help us better understand the landscape of financial solutions that are offered to smallholder farmers, identify some of the key features that products share, and learn about which organizations are active in this space.

We developed a beta version of the database by consolidating previous databases from the Initiative for Smallholder Finance (on local lenders and direct-to-farmer financiers) and conducting a desk analysis of published descriptions of financial solutions targeted at smallholders.  The current version contains over 600 different provider solutions offered in Africa, Asia and Latin America.  Each record describes a specific product or service by a specific provider, with details on the model, like associated training, operational partners, or delivery model. 

The database is built on publicly available information from providers, or identified through resources like Agrilinks, the AgriFin Facility, the Rural Finance and Investment Learning Center, the Microinsurance Network or the World Bank, IFAD or CGAP online libraries.  We estimate a high rate of coverage of solutions cited in English, but are looking to expand both breadth (more solutions) and depth (more data on these solutions).  

We plan to provide access to a condensed but raw version of the database, so that users can add new solutions, add additional detail on solutions, or suggest corrections to mistakes.  

Indicative aggregate findings

While the database has not captured the complete offering of financial solutions targeted at smallholders, especially informal and semi-formal solutions, and there are missing details for others, a snapshot of data collected thus far provides some indication of what the offering may look like on the ground today.

Identified solutions for smallholder farmers by country 

Graph of smallholder financial solutions identified by country
Aug 2015 snapshot of RAF Learning Lab Smallholder Financial Solutions database

The three countries where we have found the most instances of financial solutions offered are India, Kenya and Zambia.  However, the top-three countries in the world that rely the most in agriculture (as measured by the value added of agriculture as % of GDP) are Sierra Leone, Central Africa Republic, and Chad with agriculture contributing over 50% to their GDPs (Source: The World Bank).  Notwithstanding anglophone bias in the data collection methodology used to develop the beta version of the database, there is a long way to go before financial solutions are offered not just to those farmers living in the most attractive markets, but to all farmers who need them.

As might be expected, farmers engaged in maize, rice, or coffee appear likely to have access to a wider offering of products targeting these commodities.  Other commodities such as potatoes, sugar cane, cassava or certain vegetables and fruits are rarely targeted in the financial solutions we identified yet are essential for many smallholder farmers (Source: FAO, Top commodities in production volume in selected African countries in 2012) .  If commodity-specific solutions represent a strong value proposition to farmers, then there appears to be much room to tailor products to wider variety of important crops.  

Almost 90% of the financial solutions we found included a credit component, but only 10 to 15% described savings, insurance, or payments products.  This may be partially caused by missing data and the database is not meant to include versions of these products not targeted at agricultural/rural clients, but the disparity of emphasis on credit is not necessarily surprising.  If one believes that smallholders have unique financial needs, the current offering does not seem fully aligned to potential demand, given (for example) that many farmers prefer savings over credit products for investments and that payments solutions may be more beneficial for poorer farmers than loans.  

Solutions citing commodity targeting and use of technology

Graphs of smallholder financial solutions identified by commodity and use of technology
Aug 2015 snapshot of RAF Learning Lab Smallholder Financial Solutions database

Perhaps surprising is the role of technology in the solutions identified.  While we hear a lot on how essential mobile and digital technology are to expanding access to financial services for smallholder farmers in a sustainable manner, only 15% of the solutions with full descriptions cited the role of technology to deliver financial products or other complementary services such as training.  Evidence from the applications to the Fund for Rural Prosperity suggests this is likely to increase, but for now many technology-based models seem to be only at pilot or experimentation stage.  The quicker this transition happens and the sooner we build a comprehensive understanding of the benefits and challenges of digital financial services, the more chances we will have to successfully reach higher numbers of smallholder farmers.

Next steps

Indicative findings from the database highlight some large gaps in the offering in key geographies, value chains, product areas, and delivery models.  But the data also show which providers are targeting these opportunities and in some cases how they are doing so.  The Lab is currently working to prepare the beta version for public testing and input.  We welcome any feedback in the meantime.  

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