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Decision Tools in Rural Finance

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Since its inception, IFAD has developed an extensive body of knowledge in rural finance, with practices at the field level analysed in numerous thematic reports, programme evaluations and mid-term reviews. It has pulled together this experience and published a manual called: Decision Tools for Rural Finance. The manual is specifically designed to support programme and project formulation and monitoring. It is hoped that it will be a useful reference tool for country portfolio managers, programme and project staff, and consultants seeking advice on technical operational issues related to rural finance.

The manual has three main sections: Section I highlights the various cross-cutting issues that are common to all IFAD rural finance programmes and form the basis of understanding rural finance. Section II examines the identification, formulation and implementation stages in the project cycle and proposes ways and means of addressing the various challenges that arise from them. Section III focuses on issues and types of interventions that are specific to each of the regions in which IFAD operates. It also underscores IFAD’s comparative advantage in implementing programmes in the particular regions.

The cross-cutting issues that are identified in the Decision Tools include:

  • the unique characteristics of agriculture finance;
  • the impact of financial sector reform, and potential roles for state-owned banks;
  • the role of client participation in rural finance programmes;
  • the importance of savings and remittance services;
  • identifying and overcoming factors that limit expansion of rural finance programmes into remote rural areas;
  • how to balance the provision of loan capital versus funding capacity-building and technical assistance;
  • policy issues and conduct of impact analysis.

Decision Tools is a ‘living document’, which will be updated and improved as the rural finance field evolves and as new principles and practices emerge. The manual already has some case studies in its annexes. The document can be downloaded in full or as a summary.

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