Rethinking technical assistance to unlock smallholder financing

Published on

November 20, 2014

The eigth briefing note in a series from the Initiative for Smallholder Finance discusses how agricultural technical assistance in the developing world maps to addressing various specific financing constraints for smallholder farmers.

Financial services and advisory support programs can help banks and financial institutions (on the supply side) overcome constraints of product design and distribution for smallholder farmers. Technical assistance can prepare farmers (on the demand side) for financing through value chain development programs or government extension programs.

Public sector institutional strengthening programs can address constraints in the enabling environment by increasing effectiveness of government institutions or supporting credit bureaus or land title reform.

Combined with financial tools from donors— such as credit guarantees, insurance, or concessionary lending to local credit providers—agricultural technical assistance plays an important role in mitigating risk and boosting confidence for financial institutions involved in smallholder financing.

However, 97% of technical assistance funding currently goes to programs that address demand side constraints, while relatively little funding supports financial institutions to develop and deploy viable products that will increase the overall supply of smallholder financing.


 

About the Author(s)

Initiative for Smallholder Finance
Learning Lab Strategic Partner

ISF is an advisory group committed to transforming rural economies by delivering partnerships and investment structures that promote financial inclusion for rural enterprises and smallholder farmers. Combining industry-leading research with hands-on technical expertise, ISF develops practical, profitable, and sustainable financial solutions.

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