CHAPTER 4

Strengthening
Financial Systems for
Smallholders

AUTHORS
Lead Authors
Panos Varangis
Rong Chen
Toshiaki Ono
International Finance Corporation

Contributing Authors
Hedwig Siewertsen
Alliance for a Green Revolution in Africa

Atsuko Toda
Africa Development Bank

Rachel Sberro-Kessler
The World Bank

ONE

Financial needs and access to financial services vary widely depending on the nature of smallholder farming.

TWO

Value chain financing is widely used as a risk mitigation mechanism in providing short-term finance in tight value chains.

THREE

Diffusion and development of ICT has been changing the agricultural finance landscape in Africa quickly. Many smallholder farmers gained access to payment services through mobile telephones, which are also used in agricultural transactions.

FOUR

Among other risk mitigation tools, agricultural insurance products have been tested in many African countries to mitigate high-severity low-frequency agricultural risks.

FIVE

An enabling environment, with smart financial regulations, targeted and effective agricultural finance policies, and well-established financial infrastructure, is essential to ensure a well-functioning financial system that promotes the development of agricultural finance.