Access to finance for smallholder farmers can serve as a critical catalyst for economic growth and poverty alleviation. Yet local bank lending – which should be a main avenue for smallholder financial access – meets only 3% of overall demand. Currently, global development donors have tried to incentivize bank lending to smallholders by focusing on guarantees, but those have not been sufficient to stimulate lending.
Banks need investment funds and technical assistance to build their smallholder banking capabilities. If local banks increased their capacity to serve smallholders, they would support over two billion of the world’s poorest people who depend on agriculture for their livelihood.
