Pathways to prosperity: Rural and agricultural finance
This report (PDF), by Mastercard Foundation, Rural and Agricultural Finance Learning Lab and ISF Advisors, analyzes the changing landscape of rural agricultural finance. The understanding of challenges faced by rural clients has expanded and there has been a rapid acceleration in technology-driven innovation. Thereby, more diverse financial services are available, and the capital market for rural finance has grown. However, there continues to be a persistent gap in smallholder an agricultural small- and medium-sized enterprise (SME) financing. With these changes comes an urgent need to develop improved frameworks for understanding the state of the sector. To do so, the authors introduce new frameworks to drive the rural finance agenda forward and understand how rural clients, financial service providers, and the capital markets can effectively work together. The Rural Pathway Model urges a dynamic view of rural households livelihoods pathways , which can help funders channel capital more efficiently towards rural service provision. This can guide rural agricultural transformation in an inclusive direction. The Service Delivery Model reflects the dramatic changes in service provision and enables us to analyze differences, challenges, and opportunities for specific financial service provides.The authors believe that there are four agenda-defining needs that the sector must address moving forward: 1) The need to think dynamically and long-term through a rural pathways lens, which should result in more tailored products, bundled offerings, and better communication with clients. 2) The need to get serious about “smart” subsidy, by utilizing the models introduced in this report to get clearer about service delivery, profitability profiles, and outcomes. 3) The need to realize the digital promise, by translating early experimentation into proven, scalable solutions. 4) The need to continue to innovate around how capital comes to market, by building more effective connections between capital need and right-fit capital supply.