Local bank lending fails to meet 97% of smallholder demand for financing. To support growth for smallholder farmers, banks must lend at affordable rates, design financial products more appropriately for farmers, and improve accessibility of financial institutions to smallholders.
Banks serving smallholder farmers could evolve in a more competitive direction marked by greater product and service innovation. In order to make strides towards closing this gap in financing, public and commercial investors should allocate capital to the banks and financial institutions that have the capabilities to grow and innovate.