Rural, Agricultural and

Value Chain Finance

Linda Jones

Chiang Mai, Sept 2007

Financial Services for the Rural

Poor - CGAP

Financial Services

Rural Finance

Agricultural Finance

Agricultural CreditFinancial Services

Financial Sector

Rural Finance

Agricultural

FinanceMicrofinance

Source: CGAP Donor Brief No. 15 October 2003

Report From RAF Conference –

Rome, March 2007

• Conference on rural and

agricultural finance

• Sponsored by FAO, IFAD, Ford

• Leading experts – researchers,

practitioners, government,

bankers

Emerging Themes in RAF*

• Regional diversity cannot be

generalized

• Research and services must be

demand-driven

• Institutional diversity equals

increased access

From Jones, SED Journal (EDMJ) Sept 2007

Emerging Themes in RAF (2)

• Are we reaching the very poor

and do we care?

• Value chain approaches offer

potential for impact

• Innovation in products /

services is a must

Emerging Themes in RAF (3)

• Define role of government

• Ignore gender at peril

• Understand and manage risks

• Need greater sharing of

information and research

Fitting VC Finance into the Picture

Financial Services

Financial Services

Rural Finance

Agricultural Finance

Microfinance

Agricultural CreditFinancial Services

Financial Services

Rural Finance

Agricultural FinanceMicrofinance

Value Chain Finance

Adapted from: CGAP Donor Brief No. 15 October 2003

Financing the Value Chain

• Not just finance within the value

chain

• Financial services needed at all

levels to ensure healthy

functioning of value chain

Value Chain Finance

MSME Finance

Commercial Banks, MFIs, CUs

Consumer

Banking

Commercial Banks, MFIs

MFIs, CUs, Coops

Commercial Banks, MFIs

Producers/

Groups

Suppliers

Wholesalers

Retailers

Value Chain

Final Consumers

Value Chain Finance MSME Finance

Microfinance

Support

Services and

Products

MSME

FinanceCommercial

Banks, MFIs

Financing the Value Chain

- Tajikistan

• Horticulture subsector project

• Microcredit to smallholders

• SME finance to processors and

suppliers

• Matching

grant facility

Financing the Value Chain

- Challenges

• Complexity of programming - systems

• Implementing agency capacity

• Local capacity

• VC Players

• Donor buy-in

Thank you!