13-14 July 2014, Kenya School of Monetary Studies, Nairobi, Kenya. 2nd African Continental Briefing. Promoting inclusive finance models for farmers in Africa. Organized by The Panafrican Farmer’s Organisations (PAFO), the ACP-EU Technical Center for Agricultural and Rural Cooperation (CTA) and the African Union Commission (AUC).
This Briefing addressed the rural finance gap through agricultural value chain finance. Financial services providers often see high risks because they lack an understanding of the agricultural sector and food markets, and have no way to evaluate the risks in agricultural value chains.
To most financial institutions, the cost of directly lending to small-scale farmers in remote rural areas is prohibitive and they are reluctant to finance rural entrepreneurs, citing high transaction costs and risks related to agriculture such as crop failure, diseases and market fluctuations as a justification. The result is a serious and long-lasting rural finance gap that keeps the economic potential of agriculture under used.
After many years of declining investment, there is a renewed interest in agricultural financing.
- The best innovations in AVC finance depend on the chain, the capacity of the different stakeholders in the chain, the interests of the stakeholders and the socio-economic and political context.
- Agricultural value chain finance offers an opportunity to reduce cost and risk in financing and reach out to smallholder farmers, expand the financing opportunities for agriculture, improve efficiency and repayments in financing, and consolidate value chain linkages among participants in the chain.
- The specific opportunities that financing can create within a chain are driven by the context and business model and the relative roles of each participant in the chain.
Session 2: Successes from farmer’s organisations
Fadel Ndiame, Lead, Farmer Organization Support Centre (FOSCA), AGRA
Building Small Farmer Organizations
“Only 20 percent of the farmers are part of a farmer organisation”.
“It requires 5 time more efforts to have a farmer organisation sign a grant agreement”
David Ruchiu, Africa Director, Farm Concern International
“The Commercial Villages Model (CVM) is a hybrid model through which typical social administrative villages are designed and systematically graduated into commercialized competitive market-led agricultural production units. It is supported by a business incubation and graduation pathway that is efficiently organized into evolve social administrative villages into commercial villages that meet the modern markets supply chain practices that include quantity and quality (Q and Q) requirements through bulking and quality assurance.”
Published on 18 Sep 2012Interview with Fadel Ndiame, Lead, Farmer Organization Support Centre (FOSCA)
On the 5th of march 2014, David Ruchiu held a presentation on ” Finance innovations combining ICT’s and warehouse receipts ” as part of the Brussels Briefing on ‘Revolutionising finance for agri-value chains’ organized by CTA Brussels at the ACP Secretariat in Brussels.