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May 23rd, 2016

Innovative and inclusive finance for youth in agriculture

Published by CTA,

This chapter “Innovative and inclusive finance for youth in agriculture” (PDF), was contributed by CTA as part of the 2015 Africa Agriculture Status Report. This chapter focused on analysing youth access to credit, savings, insurance or other forms of financing to promote their entrepreneurship drive. It starts with a brief review of the challenges preventing young agripreneurs from accessing needed finance. It went further to assess the current state of financing available to youth in agriculture, observing that financing youth in agriculture is already happening. Authors summarized their analyses and recommendations into five key points: 1)Links between young entrepreneurs in agriculture and formal financial institutions need to be strengthened by improving youth’s financial literacy and the capability of institutions to assess agricultural sector opportunities; 2) Better metrics can drive better policy – African governments should produce and share reliable statistics on youth employment in agriculture and their financial inclusion; 3) Young agripreneurs, having fewer assets, will benefit from forms of finance that do not require fixed collateral, such as contract farming, leasing, warehouse receipt finance or factoring. Governments and international development organizations should encourage such forms of finance through blending and guarantee schemes; 4) Crowdfunding platforms offer opportunities to young African entrepreneurs, including in agriculture, and governments should remove all barriers that prevent them from operating properly, including for equity and loan financing; and 5) A scarcity of venture capital firms (including the mentoring services that they provide) hampers African young entrepreneurs, including in agriculture, in developing and scaling up their businesses. Development organizations should continue to scale up their support for challenge funds and impact investing to fill this critical gap in the market. Leveraging on these recommendations could help governments and development organisations working with young people in agriculture to facilitate increased youth engagement in agriculture and unleash their entrepreneurship drive.

Curated from ardyis.cta.int