The Initiative for Smallholder Finance is a multi-donor effort designed to demonstrate how specific products and services can expand the reach of financing for smallholder farmers. Initiative activities include targeted market research, product development and testing, and investment facilitation in the smallholder finance market. Sponsors of the Initiative for Smallholder Finance include the Citi Foundation, Ford Foundation, KFW Development Bank, MasterCard Foundation, Skoll Foundation, and USAID. The Aspen Network of Development Entrepreneurs, Business Action for Africa, Business Fights Poverty, CGAP, Root Capital, and TechnoServe provide advisory support.
The Initiative for Smallholder Finance has three primary functions: to conduct research, to facilitate communications among market participants in different parts of the agricultural finance supply chain, and to broker investment opportunities between market participants. In doing those activities, we will demonstrate how specific models and products can expand the reach of bank financing for smallholders.
PurposeWhy did we create the Initiative for Smallholder Finance? The world’s 450 million smallholder farms could help feed the world, but most smallholders lack funds to invest in their farms to improve productivity and connect to markets, and most are unable to access credit to enable them to do so. A directional estimate of smallholder demand for financing suggests the market could be as large as $450 billion, the vast majority of which is unmet.
Growing global demand for agriculture commodities, along with consumer preferences, have interested leading buyers in sourcing from smallholder farmers. Meanwhile, growing demand and rising food prices have led to renewed donor focus on the agricultural sector. This momentum makes agricultural investment a timely opportunity for buyers and investors. Still, the smallholder financing market is in its early stages and is undeveloped, fragmented, and undercapitalized.
The release of the report Catalyzing Smallholder Agricultural Finance in September 2012, authored by Dalberg with support from the Citi Foundation and Skoll Foundation, has helped to focus banks, investors, donors and companies on meeting the financing needs of smallholder farmers around the world. Now, the Initiative for Smallholder Finance – will help those entities turn that attention into action.
The Initiative for Smallholder Finance will build the essential research and development infrastructure across the industry and demonstrate progress in targeted product development, piloting and partnership development. Pilots and partnerships will have significant monitoring, earning and evaluation and operational research components. These will form the basis of a knowledge sharing, dissemination, policy and advocacy agenda structured around online forums, working papers and conferences. Ultimately, this initiative’s success will be measured by making marked progress towards closing the gap between the $450 billion in smallholder agricultural financing need and the current $20-$30 billion supply today.
Steering and Advisory Committee:The sponsors of the Initiative for Smallholder Finance include the Citi Foundation, Ford Foundation, KFW Development Bank, MasterCard Foundation, Skoll Foundation, and USAID. Additionally, the Aspen Network of Development Entrepreneurs, Business Action for Africa, Business Fights Poverty, CGAP, Root Capital, and TechnoServe provide advisory support.
- Briefing 1: Local bank Financing for Smallholder Farmers: A $9 Billion Drop in the Ocean
- Briefing 2: A Roadmap for Growth: Positioning Local Banks for Success in Smallholder Finance
- Briefing 3: Smallholder Impact and Risk Metrics: A Labyrinth of Opportunity
- Briefing 4: The Role of Government in Developing Agricultural Finance: A look at the history of Germany, the US, and South Korea
- Briefing 5: Investor and Funder Guide to the Agricultural Social Lending Sector
- Briefing 6: Lending a Hand: How Direct-to-Farmer Finance Providers Reach Smallholders
- Direct-to-Farmer Finance Innovation Spaces Playbook
- Resource Hub: Impact and Risk Metrics in Smallholder Finance
- Catalyzing Smallholder Agricultural Finance
- Webinar Recording: Local Bank Financing for Smallholder Farmers
- Webinar Recording: Five New Technologies to Simplify Data Collection in Smallholder Finance
The Initiative for Smallholder Finance in the news:
- Direct-to-Farmer Finance: Business models for serving the hardest-to-reach smallholders NextBillion (9 October 2014)
- How to Grow the Social Lending Sector and Help Smallholder Farmers Skoll World Forum (11 August 2014)
- The Role of Government in Agriculture Council on Foreign Relations (22 July 2014)
- Is Finance the Primary Binding Constraint for Smallholder Farmers? Business Call to Action (8 July 2014)
- Smallholders face financial worries and fragile food production system The Guardian (8 July 2014)
- Social Lending for Smallholders: Opportunities to support social lenders in closing the smallholder agricultural finance gap NextBillion (2 July 2014)
- A Guide to Working with Informal Financial Institutions TechnoServe (17 June 2014)
- Building Blueprints for Resilience Root Capital (30 May 2014)
- Index Insurance Is For Farmers What Credit Scoring Was For Consumer and Small Bank Lending IFC (7 May 2014)
- Impact and Risk Metrics...in Smallholder Finance and Beyond NextBillion (6 May 2014)
- Positioning Local Banks for Success in Smallholder Finance NextBillion (5 February 2014)
- A Roadmap for Growth: Positioning Local Banks for Success in Smallholder Finance Business Fights Poverty (24 January 2014)
- Understanding Smallholders' Financial Needs is Key First Step CGAP (27 January 2014)
- Small Farms, Big Funding Gap: Local bank financing for smallholder farmers meets only 3 percent of overall demand NextBillion (19 December 2013)
- The Initiative for Smallholder Finance: Building a pathway for scalable smallholder agricultural finance Skoll World Forum (18 December 2013)
- Local Bank Financing for Smallholder Farmers: A $9 Billion Drop in the Ocean Business Fights Poverty (9 December 2013)
- Where’s the Feast? Cracking Food Insecurity Root Capital (30 November 2013)
- How to Help 450 Million Poor Farmers–Without Destroying the Earth Forbes (25 November 2013)
- Developing the microfinance movement for smallholder farmer Skoll World Forum (24 October 2013)
- Presentations: Third Consultative Forum on Coffee Sector Finance International Coffee Organization (8 October 2013)