Literature Review of RAF Impact in Africa

Published on

December 4, 2015

The Learning Lab and the Evans School Policy Analysis and Research Group (EPAR) present a new literature review of the impact of rural and agricultural finance products on smallholders in the African context.

The Learning Lab is interested in understanding impact: how rural and agricultural financial solutions contribute to poverty reduction and improved livelihoods for rural households.  To lay the foundation for future work, the Lab commissioned the Evans School Policy Analysis and Research Group (EPAR) to conduct a review of evidence to date on the impact of rural and agricultural finance on some of the key impact indicators in the MasterCard Foundation’s RAF theory of change.  This evidence informs the Learning Lab’s understanding of the impact case for RAF as well as our perspective on where future research efforts should focus.  Since we have not found any similar evidence review, and the results should be useful for the broader RAF community, EPAR and the Learning Lab are co-publishing this review.  This is the first Learning Lab research brief and the first in its series on Impact and Measurement.  

A note on definitions: 

The Learning Lab defines rural and agricultural finance as financial solutions (typically credit, savings, insurance, payments, or a combination thereof) targeting smallholder farmers (typically <2 hectare of land) or other rural customers.  The Foundation’s RAF portfolio is dedicated exclusively to Sub-Saharan Africa, and we focused on studies in Africa because context is a critical factor in impact.  In order to understand the evidence, however, the EPAR team looked at some solutions that were not necessarily tailored for rural customers but where impact on rural customers was reported.  In addition, they examined key papers and findings from outside of Africa that were cited by studies in Africa.  

EPAR Abstract: 

The report (see link below) reviews and summarizes the existing evidence on the impact of access to financial services/products on measures of production, income and wealth, consumption and food security, and resilience for smallholder farmers and other rural customers and their households in Sub-Saharan Africa. This study covers four main types of financial products/services: 1) credit; 2) savings; 3) insurance; and 4) mobile money and digital products. We also review the very limited evidence on the effectiveness of bundling these products/services together and of combining them with other offerings such as trainings or support for access to markets, and of providing them via digital channels. We note when financial products/services have been specifically designed to serve the needs of rural customers or smallholder farmers, since the needs of these groups are often very different from those of other stakeholders. 

Lab takeaways:

The literature review provides a great overview of what the rigorous impact studies to date have found, and a full bibliography to dig further.  Some of the key takeaways for us are that rural and agricultural finance solutions can deliver real impact for smallholder/rural households, but the impact is far from guaranteed, especially since successfully utilizing a financial solution to transform one's livelihood hinges on a complex range of factors.  Perhaps most importantly, it's clear that there's a lot we don't know and need to learn about impact of different financial solutions - including the product experience and the context in which they are delivered - on smallholder households.  These themes are discussed further in our forthcoming Impact Case study in which Dalberg builds from the foundation of the EPAR literature review.  

About the Author(s)

Original Content

The Learning Lab works to identify and share knowledge relevant to our learning agenda and our users, but also to create new knowledge through research and facilitated learning. Original content from the Learning Lab includes news about the Lab, analyses we've conducted, knowledge products we've created, and posts we've written about other relevant initiatives.

Learning Lab Contributor

The Evans School of Public Policy and Governance at the University of Washington hosts EPAR (Evans School Policy Analysis and Research Group), an  innovative student-faculty team model that provides rigorous, applied research and analysis to international development stakeholders.  Established in 2008, the EPAR model has since been emulated by other UW Schools and programs to further enrich the international development community and enhance student learning.