Professional Documents
Culture Documents
Breakout Group Finance for Food Global Donor Platform for Rural Development Roland Gross (Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ) GmbH) January 2013
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Overview
1. 2. 3. 4. 5. 6. 7. Introduction Old and New Paradigms in Rural Finance Emerging Approaches and Services in Rural Finance Potential Role of Partners Examples from German Development Cooperation Impact Measurement in Rural Finance Further Readings
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Increase in private sector investments into international value chains in agriculture and forestry
Due to increasing demand and prices for agricultural commodities as well as liberalization of agricultural trade in the last decades
Reduction of transaction cost for doing business due to availably of IT technologies also in rural areas
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Urban Finance
Rural Finance
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Agricultural Finance
Agricultural finance: Provision of financial services for agricultural production mostly in rural areas Microfinance: Provision of financial services to poor people in urban and to a lesser extent in rural areas
Microfinance
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3. Emerging Approaches and Services in Rural Finance Different Actors Serving Different Clients
Providers of informal finance services
Traders, processors etc.
Microfinance institutions
Professional member based financial services (cooperatives, village banks, etc.) New information technologies reduce transaction costs and increase outreach of service
State Banks
Serving different groups of clients according to political objectives
Commercial banks
Due to increased commercial activities in rural areas Development of products specifically designed for rural borrowers
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3. Emerging Approaches and Services in Rural Finance - Other Success Factors for a Modern Rural Finance Approach
Conducive legal and regulatory framework
Both for financial institutions and rural enterpriese
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7. Further Readings
Agricultural Finance Trends, Issues and Challenges (BMZ/GIZ, Dr. Frank Hllinger, 2011) [link] Scaling Up Access to Finance for Agricultural SMEs - Policy Review and Recommendations (GPFI/IFC, 2011) [link] Subsidies as an Instrument in Agriculture Finance: A Review (The World Bank et al., Richard L. Meyer, 2011) [link] Agricultural Value Chain Finance - Tools and Lessons (Calvin Miller and Linda Jones, 2010) IFAD Decision Tools for Rural Finance (IFAD, 2010) [link] Policy Brief on Agricultural Finance in Africa (AU, GIZ, BMZ, MFW4A, 2012) [link] KfW Symposium 2010: Finance for Food - New Agricultural and Rural Finance [link] Agricultural Finance Revisited (FAO & GTZ), 1998 [link] Making the most of agricultural investment (IFAD, FAO, Sonja Vermeulen and Lorenzo Cotula, 2010) [link]. Competitive African Cotton Initiative (COMPACI) Background document (DEG, GIZ, Aid by trade Foundation, Cotton Made in Africa, 2012) [link]
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Example: Promoting Competitiveness of Diversified Cocoa Smallholdings in Nigeria, Cameroon, Ghana, Cte dIvoire
Implemented by GIZ on behalf of BMZ with co-funding of World Cocoa Foundation (WCF) a component of the Cocoa Livelihoods Program (CLP) and the Bill & Melinda Gates Foundation. Farmer Business School (FBS) modules tackle access to financial services plus cost-profit calculations for cocoa and food crops (maize and cassava), farm management for food security and balanced diet, professional organization. Impacts: 38 to 62% of the surveyed farmers - according to the country have opened saving accounts and constitute the collaterals to access loans. Farmers (72% women) respond to loans with high adoption rates of improved techniques as technical and entrepreneurship training are preconditions for access and partnerships with input suppliers are part of the innovation to ensure supply of quality inputs. Reimbursement of the loan is beyond 96%. FBS farmers have more than doubled their annual income from non-cocoa products (regional average: 230 USD per household; Nigeria: 414 USD per household, i.e. 436 % increase over baseline). De-risked financial products for cocoa and maize: The loans cover the financing of certified seeds of improved varieties, approved chemical inputs, technical and business skills training and GPS measurement of farm plots. For more information see: http://www2.gtz.de/wbf/4tDx9kw63gma/ACI-CompACISCB%20presentation%20V4.pdf.
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