According to a recent report (Dalberg Global Development Advisors, Inflection point, 2016), total lending to smallholder farmers amounts to US$ 56 billion, around a quarter of smallholders’ financing needs of more than US$ 200 billion. The largest source of funds, providing US$ 25 billion, are informal/community-based financial institutions, followed by value chain actors (with US$ 17 billion, some of which is funded from bank loans). Of the US$ 14 billion of lending by formal financial institutions, around US$ 9 billion comes from state banks, and another US$ 3 billion from Micro Finance Institutions (MFIs). Commercial banks lag far behind, with just US$ 1 billion, and much of this is post-harvest finance (often through warehouse receipts).
Clearly, public authorities in developing countries face a similar challenge as international organizations: they cannot expect to meaningfully reduce the financing gap just by increasing their own agricultural finance budgets. Instead, they too need to find ways to achieve leverage, to crowd in agricultural finance from not only commercial banks, but also local investors. Some Central Banks and other government agencies have started experimenting with novel forms of finance and guarantees to achieve such leverage. What are the experiences so far, what lessons have been learned? What are the most promising approaches for public financiers keen to achieve leverage? What are the main constraints, and how can they be addressed?
WG3 Session Programme
Setting the stage: Mr. Millison Narh, Deputy Governor, Bank of Ghana / Afraca Chairman
Keynote Speaker: Dr. Aliyu A. Abdulhameed, Managing Director/Chief Executive Officer, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)
Day 1: 07 November 2016 15:45 - 17:30
Hall 300Session organisers