Insight into social lending and direct-to-farmer finance for smallholder farmers
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. They have published several briefings which provide insight into targeted market research, product development and testing and investment facilitation in the smallholder finance market. Their investor and funder guide (PDF) to the agricultural social lending sector offers opportunities to support social lenders in closing the smallholder agricultural finance gap. A briefing document on direct-to-farmer finance explored over 150 finance providers who offer finance directly to smallholder farmers globally. According to this document, providers’ specific approaches to direct-to-farmer finance cluster around four business model archetypes: Build & Integrate, Build & Partner, Leverage & Network, and Extend & Mobilize. Understanding the four archetypes can help funders, investors and finance providers better align models across smallholder farmer segments and identify opportunities to address scaling challenges. The Direct to Farmer Finance: Innovation Spaces Playbook (PDF) offers concrete ways in which direct-to-farmer finance providers can innovate in order to better serve smallholders.