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Agricultural Lending 2015

A How-To Guide

Agriculture is the main source of income A and employment for the 70 percent of the world’s poor, who live in rural areas. Yet, only 10 percent of gross domestic produce (GDP) in low and middleincome countries is generated by the agricultural sector 1. This results in the severe mismatch between the proportion of people employed by the agriculture sector and the proportion of GDP attributable to agricultural produc tion. In developing countries, most actors in the agricultural sector are smallscale agricultural producers and small, nonfarm entrepreneurs involved in a variety of microenterprises with diversi fied, yet limited income sources.

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Description

This toolkit introduces and explains step by step the key elements of success for FIs to expand financial services to farmers. The content was developed around IFC’s global experience in assisting FIs with the development and implementation of agricultural finance products. The benefits of this work are synthesized in this guide, along with knowledge and expertise of best practices among both IFC clients and others. The guide includes advice on each step involved and tips on how to address the complex challenges that might arise during product development process.

The guide has seven chief components

  1. Introduction to Agricultural Finance: This section introduces agricultural finance and identifies the common risks in agricultural production that may impact client repayment capacity.
  2. The Product Development Process: This section introduces the product development process and how an institution could best position itself for sustainable success in rural markets.
  3. Product Development Phase 1 – Preparation: The first step in the product development process involves identifying gaps in an FI’s processes, lending policies, loan appraisal forms, and determining optimal delivery mechanisms for launching new products in rural areas.

Additional information

Language

English

Pages

136

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