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Rural Finance Innovations: Topics and Case Studies
Topic : Others
This study of innovations in agricultural finance seeks to educate policy makers, task managers, and practitioners by highlighting four key areas where innovation could lead to greater access to agricultural finance:
- warehouse receipts and collateral securitization measures;
- risk management products;
- supply chain finance; and
- technology.
The paper explores these themes by giving examples from around the world where these strategies are being applied. Because many of these case studies are in the nascent stages, a full analysis of their “success” cannot be made at this point in time. The paper attempts to address the outcomes to date, and where the case studies are sufficiently advanced, give an indication of their results.
The paper describes the issues surrounding the themes and how innovative techniques can be used to overcome traditional barriers to providing financial services to agriculture by reducing either the risks associated with lending, the costs, or both. The diverse group of case studies and thematic discussions also underscore some key lessons regarding the role of government in its quest to lower costs and risk in the rural finance space.
The case studies include the following:
- Drumnet – supply chain financing and technical assistance in Kenya
- Clark Cotton – supply chain financing in Zambia
- BASIX – weather insurance and mobile computers for portfolio management in India
- SudAgroServ – supply chain financing with farmer ownership in Tajikistan
- Indian Tobacco Company – Mobile marketing in India
- Fondos – Risk pooling and reinsurance in Mexico
- CRDB Ltd. – Price risk and collateral management in Tanzania
- Cedula de Produto Rural – farm bonds to provide liquid collateral in Brazil
- Nacional Financiera – reverse factoring to create linkages between small suppliers and big buyers
This paper makes considerable use of tables to summarise and make the information easy to assimilate. The appendices, for example, have a useful overview of physical and financial price risk management instruments and enabling technologies. The blend of theory and practical examples is also extremely useful to those who are less familiar with any of the four key themes that the paper addresses.
- Resource type Paper
- Author World Bank
- OrganisationWorld Bank Group
- Year of Publication2005
- RegionGlobal
- LanguageEnglish
- Number of pages83 pp.