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Rural and AgriculturalFinance
Day 1: Block 1
What and Why of Rural Finance?
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Self Introduction 7 Questions
1. Name, institution, and current job title.2. What activity are you working on now
that is related to Rural and AgriculturalFinance (RAF)?
3. What was your previous experience inrural areas and agricultural finance?
4. Other than your job, are there otherreasons that you interested in rural andagricultural finance?
5. Is there a specific experience relatingto RAF that you could share with uslater in the course?
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Sub-Saharan Africa less than U$1 a day
Middle East & North Africa less than $2 & $1 a day
Source: World Bank Estimates
70% of the Extreme Poverty is in Rural Areas 70% of the Extreme Poverty is in Rural Areas 70% of the Extreme Poverty is in Rural Areas 70% of the Extreme Poverty is in Rural Areas
MDG Challenge Rural Development
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The Many Faces of Poverty
Poverty is more than lack of income
Poverty is inequality
Poverty is not static
Poverty is vulnerability
Poverty is lack of infrastructure
Poverty is lack of capacity
The poor are often exploited, their ability to make
choices and to participate in normal activities insociety is limited
Poverty is lack of human rights
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Faces of Rural Poverty
70% of the Extreme Poverty is in Rural Areas 70% of the Extreme Poverty is in Rural Areas 70% of the Extreme Poverty is in Rural Areas 70% of the Extreme Poverty is in Rural Areas
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There are Many Reasons forPoverty
DroughtWar &conflicts
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Lacking Infrastructure
and Capacity
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Producing, But Lacking Scale
What other reasons are people poor?
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Rural and Agricultural Financeand HIV-AIDS
> 40 million people are living with HIV/AIDSwith 60% in sub-Saharan Africa 15,000 new infections each day
Socially and financially affected 40 million AIDS is not only a huge health and social
issue, it is an economic one! Affected households use financial services asone way to protect and build assets
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Useful Definitions for Rural andAgricultural Finance (RAF)
Agricultural finance: A field of work in which people aim to improvethe access of the agriculture industry, including farmers and all relatedenterprises, to efficient, sustainable financial services.
Rural finance: A field of work in which people aim to improve theaccess of rural communities to efficient, sustainable financial services.
Microfinance : Financial services for lower-income households andmicro and small enterprises; a diverse range of financial institutionsoffers microfinance services, including specialized microfinanceinstitutions (MFIs), commercial banks, and NGOs.
Value chain : The series of transactions necessary to bring a productfrom inputs to the final market, involving a process of adding value atevery stage.
Financial institution : An entity regulated or not that specializes inthe provision of financial services
Financial intermediary : A financial institution that collects, deposits,and lends these deposits.
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Beyond Agricultural Credit: RURAL FINANCE IN PERSPECTIVE
Financial Services
Financial Services
Rural Finance
Agricultural Finance
Microfinance
Agricultural Credit
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The Role of Rural Finance inDevelopment
Rural Finance has been:
Politically manipulated to gain votes Seen as a way to deliver subsidies - welfare
transfer system (e.g. cheap credit for fertilizer)
BUT RURAL FINANCE IS
A multi-purpose tool to facilitate ruraldevelopment
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Majority of poor live in rural areas
Improved financial marketsaccelerate agricultural and rural
growth contributing topoverty reduction
Rural Finance and PovertyAlleviation
In most countries, economic growth in agriculture - is akey precondition for overall economic growth andpoverty reduction (because it directly or indirectly benefitssmallholders, tenants and wage labourers)
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Rural Finance and PovertyAlleviation cont.
Rural Finance can provide access to savings, lending,financing to the poor hence increasing the opportunitiesto the poor and contributing to poverty reduction
In many developing countries , therural production and distribution isstill a leading economic sector ,the main exporter, and the majoremployer, especially for the poorand women
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Rural Finance Investing for aBetter Future
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Rural Finance Is Key to a BrightFuture
Informal Semi-Formal
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Formal Trader Finance
RF ... a catalyst for buildingcapacity
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Interventions to ImproveRural Livelihoods
3. Policy & programdecision support
2. Marketing systemdevelopment
1. Human & institutional
capacity building
Improve rural incomesthrough market-oriented,
profitable and resiliententerprises
Disruptions offormer
livelihoods
Supportsystems
collapseWeak local
governmentcapacity
4. Financial services
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Facilitating Capital Flows for RuralInvestment and Development
Borrowing
Saving
Saving Up
Saving Down
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