Refinancing guarantees: calculated risks on behalf of small rural farmers
In 1992, SOS FAIM, a Belgian development NGO took the initiative of creating a loan guarantee fund for Latin America.
Initially, this program aimed to facilitate locally sourced financing for SOS Faim’s southern partners, by providing first class guarantees, which would be acceptable to commercial banks. The times were characterised by the widespread withdrawal of the state: the dismantling of many development banks and the implementation of structural adjustment programmes that had been imposed by international institutions. The partners for whom the international guarantee fund was designed were both rural farmers’ associations in need of working capital (for collecting and / or marketing produce) and micro finance institutions that required additional funds in order to serve a larger number of farmer and micro entrepreneur clients.