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on Microfinance |
| By: | Liu, Yanyan; Deininger, Klaus |
| Abstract: | Since the establishment of the Grameen Bank in Bangladesh in 1976, microfinance has boomed. As of December 31, 2007, 3,552 microcredit institutions had reached 154 million clients worldwide, about 106.6 million of whom were among the poorest when they took their first loan. Such expansion can be at least partly attributed to the widely adopted practice of group lending in microfinance programs. In contrast to individual lending, group lending (or joint liability) grants a loan to a group of borrowers, and the whole group is liable for the debt of any individual member in the group. This practice allows microfinance programs to rely mainly on accountability and mutual trust among group members rather than financial collateral to insure against default. Given that the poor often lack appropriate financial collateral, group lending programs offer a feasible way of extending credit to poor people who are usually kept out of traditional banking systems. There is considerable debate about whether such groups can be sustainable, achieving sound repayment performance while serving poor borrowers. The factors affecting repayment performance are thus of great policy relevance. This brief examines whether and how much repayment is affected by three factors: the source of the loan, groups’ provision of public goods in the form of insurance substitutes, and the monitoring and repayment rules of the federations of groups. The data come from more than 2,000 self-help groups (SHGs), federated in 299 village organizations in the Indian state of Andhra Pradesh. The SHGs under study were supported by a large World Bank program called the Indira Kranti Patham (IKP) program, with a cost of US$260 million. The program has been replicated in other states in India and may be replicated in other countries. A better understanding of factors influencing repayment will therefore help improve the performance and advance of the program. |
| Keywords: | Indira Kranti Patham (IKP) program, Micro-credit programs., self-help groups (SHGs), |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(7)&r=mfd |
| By: | Giné, Xavier |
| Abstract: | Identity theft is a common crime the world over. In developing countries, the damage caused by identity theft and identity fraud goes far beyond the individual victim, however, and ultimately creates a direct impediment to progress, particularly in credit markets. Recent research reveals that biometric technology can help reduce these problems. A biometric is a measurement of physical or behavioral characteristics used to verify or analyze identity. Common biometrics include a person’s fingerprints; face, iris, or retina patterns; speech; or handwritten signature. These are effective personal identifiers because they are unique and intrinsic to each person, so, unlike conventional identification methods (such as passport numbers or government-issued identification cards), they cannot be forgotten, lost, or stolen. Recent advances in recognition technology coupled with increases in both digital storage capacity and computer processing speeds have made biometric technology (for example, ocular or fingerprint scanners) feasible in many applications, from controlling restricted building access to allowing more effective delivery of targeted government programs with large-scale identification systems, such as those being implemented in India by the Unique Identification Authority of India. Biometric technology can also improve access to credit and insurance markets, especially in countries that do not have a unique identification system, where identity fraud—the use of someone else’s identity or a fictitious one—to gain access to services otherwise unavailable to an individual is rather common. For example, lenders in Malawi describe past borrowers who purposefully defaulted then tried to obtain a fresh loan from the same or another institution under a false identity. And, although less common in developing countries because markets are less developed, the potential for sick individuals without healthcare coverage to use the insurance policy of a friend or relative does exist. The response of lenders and insurance companies has been to restrict the supply of such services to the detriment of the greater population, not just those people committing identity fraud. |
| Keywords: | Biometric technology, Commodities, conditional cash transfers, credit, Insurance, rural areas, Subsidies, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(9)&r=mfd |
| By: | Lonie, Susie |
| Abstract: | Over the past three years, payment strategies for emerging markets have been revolutionized by the advent of a simple cell-phone-based payment service in Kenya called M-PESA (“M” for “mobile” and “pesa” for “money”). From a small-scale pilot program in 2006, M-PESA has become an outstanding success in Kenya; customer response has been unprecedented. Currently, more than 9 million Kenyans use M-PESA to perform tens of millions of transactions every month throughout the country. Although this success has led to new opportunities, it has also brought about many unforeseen challenges. |
| Keywords: | M-PESA, Mobile Phone, rural areas, rural banking, safe money transfers, small-scale pilot programs, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(8)&r=mfd |
| By: | Ritchie, Anne |
| Abstract: | Community-based financial organizations (CBFOs) are user-owned and -operated groups that provide mainly saving and lending services but may also offer other financial services such as insurance. These independent organizations are based in local communities, with local governance and management. CBFOs range in size. They can take the form of informal and unregistered groups of five to seven people, usually women, who meet weekly to save small amounts of money that they then lend to each other and possibly to other members of the community. They also include larger, slightly more formal groups of up to 40 people who have written by-laws, and they include small financial cooperatives. CBFOs flourish among people who have poor access to banks and nonbank financial institutions such as microfinance institutions (MFIs). |
| Keywords: | Community-based financial organizations (CBFOs), Insurance, lending, saving, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(3)&r=mfd |
| By: | Kloeppinger-Todd, Renate; Sharma, Manohar |
| Abstract: | Most rural households lack access to reliable and affordable finance for agriculture and other livelihood activities. Many small farmers live in remote areas where retail banking is limited and production risks are high. The recent financial crisis has made the provision of credit even tighter and the need to explore innovative approaches to rural and agricultural finance even more urgent. This set of 14 briefs clearly points out the importance of business realities faced by small farmers, including low education levels, the dominance of subsistence farming, and the lack of access to modern financial instruments. These conditions mean that new and innovative institutions are required to reach small farmers. Emerging communication technologies provide new opportunities for rural banking by reducing business costs and alleviating information asymmetries. New financing instruments, such as weather index-based insurance and microinsurance, also have great potential for managing the risks faced by small farmers. In addition, bundling financial services with nonfinancial services like marketing and extension services offers new opportunities for small farmers to increase their productivity and incomes. Finally, an enabling policy environment and legal framework, enforcement of rules and regulations, and a supportive rural infrastructure all contribute immensely to making sustainable access to finance a reality. Table of Contents: •Innovations in rural and agriculture finance: Overview by Renate Kloeppinger-Todd and Manohar Sharma •Financial literacy by Monique Cohen •Community-based financial organizations: Access to Finance for the Poorest by Anne Ritchie •Rural banking in Africa: The Rabobank approach by Gerard van Empel •Rural banking: The case of rural and community banks in Ghana by Ajai Nair and Azeb Fissha •Rural leasing: An alternative to loans in financing income-producing assets by Ajai Nair •Determinants of microcredit repayment in federations of Indian self-help groups by Yanyan Liu and Klaus Deininger •M-PESA: Finding new ways to serve the unbanked in Kenya by Susie Lonie •Biometric technology in rural credit markets: The case of Malawi by Xavier Giné •Credit risk management in financing agriculture by Mark D. Wenner •New approaches for index insurance: ENSO insurance in Peru by Jerry R. Skees and Benjamin Collier •Microinsurance innovations in rural finance by Martina Wiedmaier-Pfister and Brigitte Klein •Combining extension services with agricultural credit: The experience of BASIX India by Vijay Mahajan and K. Vasumathi •Bundling development services with agricultural finance: The experience of DrumNet by Jonathan Campaigne and Tom Rausch |
| Keywords: | Agricultural innovations -- Developing countries, agriculture finance, Financial crisis, microinsurance, Poverty reduction, rural banking, Rural finance, Rural households, Small farmers, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020fo:18&r=mfd |
| By: | Nair, Ajai; Fissha, Azeb |
| Abstract: | Before the late 1970s, rural dwellers in Ghana had almost no access to institutional credit for farm and nonfarm activities, and in many rural communities, secure, safe, and convenient savings and payment facilities hardly existed. In response to this situation, the Government of Ghana took several measures to increase access to credit in rural areas, including facilitating the establishment of rural and community banks (RCBs). This brief discusses the history of RCBs, their business model, their services, and their financial performance. It then draws some lessons relevant for others involved in or planning similar initiatives. As a network, RCBs are the largest providers of formal financial services in Ghana’s rural areas. By the end of 2008, Ghana had 127 RCBs with a total 584 service outlets, representing about half of the total banking outlets in the country. The RCB network reaches about 2.8 million depositors and 680,000 borrowers. Although the service delivery performance of the RCB network has been strong, its financial performance has been mixed. The profitability and net worth of the network have grown, but the financial performance of some members has been poor, and a small number are insolvent. |
| Keywords: | credit, Financial institutions, rural and community banks (RCBs), rural areas, rural banking, savings, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(5)&r=mfd |
| By: | Wiedmaier-Pfister, Martina; Klein, Brigitte |
| Abstract: | Poor people in developing countries are vulnerable to a broad range of shocks that affect their livelihoods, including illness, accidents, and death as well as loss of assets such as animals, crops, and machinery. The poor are still predominantly rural, and their vulnerability is even higher than that of their urban peers. Health facilities are less available and less well equipped in rural areas; water, sanitation, roads, and telecommunication are less developed; and people are less educated and not as aware of risk-mitigation mechanisms. Given the rural character of poverty in many countries, poverty reduction remains strongly connected to agricultural development, and sustainable agricultural development depends on well-organized risk mitigation. One important tool for mitigating risk is microinsurance. The International Association of Insurance Supervisors (IAIS) defines microinsurance as “insurance that is accessed by the low-income population, provided by a variety of different providers but run in accordance with generally accepted insurance practices (including the IAIS Insurance Core Principles).” It differs from traditional insurance in that it is adapted to the circumstances of the poor: premiums are low, products have simple designs, it is offered through well-trusted and innovative channels, premium payments are flexible, and claims are settled promptly. Microinsurance has the potential to enable the rural poor to mitigate the effects of shocks that threaten their lives, productivity, and assets. It can help prevent emergencies from depleting poor people’s savings and other assets. Furthermore, it allows households to invest in high-risk, high-return activities by securing the lending risk for agricultural and other investments. Financial sector reforms in many countries have begun to include insurance as an important pro-poor financial service along with other microfinance services such as savings, lending, and cashless payments. According to a study by the International Labour Organization, microinsurance in Africa almost doubled from 2006 to 2009. The survey shows that half of the schemes were growing faster than 30 percent a year between 2007 and 2008. Data on growth in rural areas, however, are not available. |
| Keywords: | agricultural development, microinsurance, rural areas, rural development policies, Rural finance, Rural poor, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(12)&r=mfd |
| By: | Cohen, Monique |
| Abstract: | The global financial crisis has intensified the problems of over-indebtedness, especially for the poor. In this context, the microfinance industry is giving more attention to building their customers’ financial capabilities, designing products that respond to their needs and preferences, and ensuring their protection as consumers. In a world where financial products and institutions are expanding rapidly, deciding which services to choose and how to use them is an increasing challenge. That challenge is especially great for customers who are poor and have limited experience in the formal financial sector. While money-management strategies can be innovative, the financial choices they make are defined by environments where informal financial practices are dominant and the consumer is often uncertain about commercial products and services. In increasingly complex and competitive financial markets, consumers with low levels of financial literacy lack the information and tools necessary to make informed decisions. Building financial capabilities can help people move from being overwhelmed by their financial options to being empowered by them. |
| Keywords: | Education, Financial literacy, global financial crisis, Microfinance, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(2)&r=mfd |
| By: | Nair, Ajai |
| Abstract: | Credit for investments that pay back in the medium to long term (three to five years or longer) is in short supply in rural areas. Credit unions and microfinance institutions (MFIs), which generally have better outreach than commercial banks in rural areas, typically provide only short-term credit. Credit available from informal sources (such as moneylenders, family, and friends) is usually both short term and too costly for investment financing. For rural enterprises seeking to acquire equipment—a typical investment need—to modernize production and thereby increase productivity, one solution may be financial leasing. Leasing offers several advantages. For traditional credit, farmers and rural enterprises are particularly constrained by a lack of assets that can be used as collateral. Leasing overcomes this constraint because it requires no collateral or less collateral than typically required by loans. Because leases also often require lower down payments than the equity required for loans, they are more affordable for rural enterprises that have limited funds and little access to borrowed funds. From the lessor’s perspective, not having to obtain collateral is particularly advantageous in a rural context. Although the difficulties involved in creating, perfecting, and enforcing security are applicable in both urban and rural contexts in most developing countries, they are more severe in rural areas where enterprises are less likely to hold titles to their assets, asset registries are less likely to be functional, and judicial processes are likely to be slower. Lessors are also likely to benefit from not being restricted by interest rate ceilings and sector-specific credit allocations—factors that have traditionally constrained rural lenders. Boxes 1 and 2 explain key features of a leasing contract, and Figure 1 shows a typical tripartite financial lease transaction involving an equipment supplier, a lessor, and lessee. |
| Keywords: | assets, Developing countries, financial leasing, rural areas, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(6)&r=mfd |
| By: | van Empel, Gerard |
| Abstract: | Many people in the vast rural areas of Africa lack access to financial services, and most commercial banks are not interested in moving into these areas due to their low income levels, lack of scale economies, and poor infrastructure. Also, few banks actually understand the most common economic activity in rural areas: agriculture. Consequently, the absence of financial institutions in rural Africa has often enticed governments to step in, particularly with state-dominated banks focused on agriculture. Many of these initiatives have failed, however, because they were too bureaucratic, too policy oriented, too concentrated on risk to only one segment of the population, or too weak in customer focus. In addition, clients considered these government-sponsored institutions to be instruments that provided grants; hence, the banks suffered from poor loan-recovery rates. While microfinance institutions have made some inroads into rural Africa with the financial backing of international nongovernmental organizations and other sponsors, their sustainability is questionable. They tend to lack banking licenses and therefore have a very limited product range, and they cannot afford modern technology-based distribution systems. |
| Keywords: | Agricultural development -- Africa, agriculture finance, Farmers, Rabobank, rural banking, supply chain, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(4)&r=mfd |
| By: | Kloeppinger-Todd, Renate; Sharma, Manohar |
| Abstract: | Everywhere in the world, small agricultural producers are entrepreneurs, traders, investors, and consumers, all rolled into one. In all these roles, small agricultural households constantly seek to use available financial instruments to improve their productivity and secure the best possible consumption and investment choices for their families. But the package of financial services available to small farmers in developing countries is severely limited, especially for those living in remote areas with no access to basic market infrastructure. When poor people have limited saving or borrowing options, their investment plans are stifled and it becomes harder for them to break out of poverty. If households have no access to insurance and are unable to accumulate small savings that enable them to pay for household and business expenses, especially during lean seasons, they are forced to limit their exposure to risk, even if high returns are expected, once again making the pathway out of poverty more arduous than necessary. Inadequate access to financial services is thus part of what is often called the “poverty trap.” |
| Keywords: | agricultural producers, agriculture finance, Developing countries, households, Investment needs, Microfinance, Poverty traps, Rural finance, Small farmers, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(1)&r=mfd |
| By: | Gurdev Singh |
| Abstract: | This working paper discusses the dependence of Indian agriculture on uncertain rains. In addition the farmers experience other production risks as well as marketing risks related to different crop enterprises and for different agro-climatic regions and areas. It then argues on the need for crop insurance as an alternative to manage production risk. It then takes up the historical overview of crop insurance products and their performance. It is followed by the discussion on the currently available crop insurance products for specific crops and regions. It discusses at length the two important products, namely, National Agricultural Insurance Scheme and Weather Based Insurance Scheme. It also reflects on some deficiencies in these products. |
| Date: | 2010–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:wp2010-06-01&r=mfd |
| By: | Skees, Jerry R.; Collier, Benjamin |
| Abstract: | The El Niño Southern Oscillation (ENSO) is a climate event associated with warming sea surface temperatures in the Pacific Ocean. In years of extreme El Niño events, areas in northern Peru experience catastrophic flooding. As of 2010, it is possible for stakeholders in northern Peru to purchase a new form of insurance that pays out just as flooding begins and stakeholders begin incurring extra costs and consequential losses. Given the high basis risk associated with selling index insurance to households, this insurance is designed for firms and institutions that serve households that are highly exposed to El Niño. ENSO insurance is sold by a Peruvian insurance company, and a major global reinsurer carries most of the risk. This new insurance product is the first insurance to use sea surface temperature as the proxy for catastrophic losses and also the first regulated “forecast index insurance” product in the world. This innovation could enhance progress in developing index-based insurance products for extreme weather events. Recent years have seen a growing number of pilot tests of index insurance for weather risk, motivated by an increased understanding of how natural disasters affect developing countries. Beyond immediate suffering (including deaths, destroyed assets, and lost income), disasters have troublesome indirect effects: economic growth can be disrupted, the poor are thrust into permanent poverty traps, and the mere presence of these risks constrains access to financial services and causes many decisionmakers to pursue low-return, low-risk strategies that impede economic progress. Much of the development of index insurance focuses on agriculture, because activities associated with agriculture remain the primary livelihood strategies for the rural poor in developing countries. Thus far, most index insurance pilots have involved products targeted at households—that is, micro-level products. Index insurance uses an objective measure (an index) of a natural event known to cause losses (such as excess rain, high river levels, or extreme sea surface temperatures). Using an index as the proxy for loss dispenses with expensive loss assessments. Furthermore, use of an index diminishes moral hazard and adverse selection, problems that plague traditional forms of insurance. Given these advantages, index insurance may be well suited to developing countries where data are sparse and delivery of financial services to smallholder households increases the per-unit cost of traditional insurance. Despite the promise of index insurance, uptake by smallholder households is slow. Presently, index insurance may be better suited for risk aggregators—that is, groups or institutions that aggregate the risk of households either through the services they provide or through informal risk-sharing arrangements (for example, agricultural lenders, firms in the value chain, and farmer associations). Focusing first on risk aggregators should also help build linkages and sustainable products that will directly serve smallholder households. |
| Keywords: | ENSO insurance, Farmers, Flooding, forecast index, index insurance, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(11)&r=mfd |
| By: | Mahajan, Vijay; Vasumathi, K. |
| Abstract: | India has nearly 90 million farm households. More than 80 percent of these farmers operate on a small or marginal scale, farming less than two hectares of land. They also usually have one or two buffaloes or cows, reared for milk and dung. Most of these small and marginal farmers fall below the poverty line. To reduce overall poverty in India, it is important to enhance the incomes of small and marginal farmers. One way to do that is to provide credit so they can get access to yield-enhancing inputs like seed, fertilizer, and cattle feed, as well as acquire irrigation pumps and crossbred cattle. But these kinds of investments alone will not raise farmers’ incomes. Agricultural and livestock development services are also crucial to give farmers knowledge of improved practices and strengthen their links to markets. BASIX is an Indian livelihood promotion institution working with more than a million poor households. Its mission is to promote sustainable livelihoods for a large number of rural poor people and women. When it started in 1996, BASIX’s primary focus was delivering microcredit to its customers. In 2001, however, BASIX asked the Indian Market Research Bureau to carry out an impact assessment, and the results were rather disappointing. Only 52 percent of the customers, who had received at least three rounds of microcredit from BASIX, showed a significant increase in their income (compared with a control group); 25 percent reported no change in income level; and 23 percent reported a decline in their income level. BASIX then carried out a detailed study of those who had experienced no increase or a decline in income and found that the reasons for these results could be grouped into three factors: 1. unmanaged risk; 2. low productivity; and 3. unfavorable terms in input and output market transactions. |
| Keywords: | agricultural extension, BASIX, Rural poverty, Sustainable livelihoods, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(13)&r=mfd |
| By: | Md. Shafiul Azam; Katsushi S. Imai |
| Abstract: | This study estimates ex ante poverty and vulnerability of households in Bangladesh using Household Income and Expenditure Survey (HIES) data in 2005. Our results show that poverty is not same as vulnerability as a substantial share of those currently above the poverty line is highly vulnerable to poverty in the future. The study finds that agricultural households or those without education are likely to be the most vulnerable. The geographical diversity of vulnerability is considerable, for example, vulnerability in a coastal division, i.e., Chittagoan Division is almost double to that of Dhaka and almost four times higher than Khulna Division. It is suggested that ex ante measures to prevent households from becoming poor as well as ex post measures to alleviate those already in poverty should be combined in evaluating poverty. In designing policies one should take note of the diverse nature of poverty and vulnerability. For the chronically poor who lack economic assets, priority should be given to reduction of consumption fluctuations and building up assets through a combination of protective and promotional programmes. Access to financial services, for example, through micro credit programmes, might help poor households build up assets as it smoothes income and consumption, enables the purchase of inputs and productive assets, and provides protection against crises. On the other hand, the transient poor and high vulnerable non-poor households are most likely to benefit from combination of prevention, protection, and promotion which would give them a more secure base to diversify their activity into higher-return, higher risk activities. [Working Paper No. 141] |
| Keywords: | poverty dynamics vulnerability Bangladesh poverty risk |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2675&r=mfd |
| By: | Wenner, Mark D. |
| Abstract: | A griculture is an inherently risky economic activity. A large array of uncontrollable elements can affect output production and prices, resulting in highly variable economic returns to farm households. In developing countries, farmers also lack access to both modern instruments of risk management—such as agricultural insurance, futures contracts, or guarantee funds—and ex post emergency government assistance. Such farmers rely on different “traditional” coping strategies and risk-mitigation techniques, but most of these are inefficient. Formal and semiformal arrangements—such as contract farming, joint-liability lending, and value-chain integration—have arisen in recent decades, but they too are limited and can be very context sensitive. One consequence of inadequate overall financial risk management is that farmers in general face constrained access to formal finance. The smaller the net worth of the farm household, the worse the degree of exclusion. Formal lenders avoid financing agriculture for a host of reasons: high cost of service delivery, information asymmetries, lack of branch networks, perceptions of low profitability in agriculture, lack of collateral, high levels of rural poverty, or low levels of farmer education and financial literacy. But, predominantly, bank managers around the world say they will not finance agriculture because of the high degree of uncontrolled production and price risk that confronts the sector. A farmer can be an able and diligent manager with an excellent reputation for repayment, guaranteed access to a market, and high-quality technical assistance, but an unexpected drought or flood can force him or her to involuntarily default. In emerging countries with fair to high levels of agricultural market and trade integration, large commercial farmers may escape this predicament because they have the ability to purchase insurance, engage in price hedging, obtain financing overseas, or liquidate assets quickly in the event of a default. Consequently, formal lenders tend to overemphasize the use of immoveable collateral as the primary buffer against default risk, which means they provide services to a limited segment of the farm population. Small- and medium-sized farmers, who constitute the vast majority of farm operators, often do not have secured-title land, which is the preferred type of collateral; if they do, its value may be insufficient to cover the loan in question. Even if farmers have sufficient titled land to collateralize loans, they may refuse low-interest formal loans and assume high-interest informal ones that have no collateral requirements instead. They may also use savings to finance agricultural production because they are averse to risking their most prized possession—land. The result is limited supply or access to formal agricultural financing, even though much of the population of Sub-Saharan Africa and South Asia is rural and depends on agriculture and livestock rearing for their main livelihood activities. |
| Keywords: | agricultural finance, agriculture finance, Risk management, Rural finance, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(10)&r=mfd |
| By: | Campaigne, Jonathan; Rausch, Tom |
| Abstract: | Agriculture is the largest economic sector in most African countries and remains the best opportunity for economic growth and poverty alleviation on the continent. Yet, sadly, the sector has been in decline over the past 40 years, and poor farmers have largely remained poor. This failure is due to many factors, including collapsed agricultural development banks, corruption, inadequate infrastructure, and poor soils and seeds. It has also occurred because smallholder farmers lack access to critical information, market facilitation, and financial intermediation services. This brief reviews the DrumNet Project and its approach to improving farmers’ access to finance in Kenya. The project has found that financing small-scale farmers is challenging given the cost and risk associated with serving rural, relatively isolated clients. Lending becomes increasingly feasible, however, in a supply-chain approach in which farmers are connected to a formal network of buyers, retailers, and financiers. |
| Keywords: | agriculture finance, DrumNet, economic growth, Poverty reduction, Small-scale farmers, Supply chain management, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:18(14)&r=mfd |