Based on more than 40 years of experience and the results of several recent TechnoServe projects in Latin America and sub-Saharan Africa, this paper explores lessons learned in working with informal financial institutions. It is designed for practitioners working to address the gap between supply and demand in agricultural finance, and is intended to support efforts to unlock capital for smallholder farmers and rural entrepreneurs.
The paper also includes lessons learned and best practice recommendations for working with MFIs. Generally, there are many types of microfinance institutions. Depending on their structure and on the banking regulations where they operate, these institutions may or may not be considered "informal financial institutions," but they are included here because of their potential role in meeting the demand for smallholder lending.