Guarantee Funds: A Response to Agricultural Credit Risk – The Latin American Guarantee Fund

This case study discusses the role that the FOGAL, a Latin America guarantee fund, plays in risk management specific to agricultural and rural finance. FOGAL was launched by SOS Faim in the 1990s and has offices in three Andean countries: Ecuador, Bolivia, and Peru. The fund aims to provide innovative, efficient, financial solutions tailored to the needs of small rural producers through their organizations, rural financial institutions, and other development actors. The study suggests that setting up a guarantee fund is a way of managing and sharing risks between the different stakeholders as well as facilitating greater involvement of financial institutions in the rural sphere. It states that FOGAL has become well established in Andean rural and agricultural spheres, both by developing its own network and through synergies implemented with key partners. The study covers the following sections in detail:

• Risk issues in agricultural financing;
• Background on the FOGAL fund with a focus on its vision, mission, beneficiaries, and area of operation;
• Key statistics regarding FOGAL with a focus on growth indicators and volume of guarantees and loans;
• FOGAL’s performance and impact over the last ten years;
• Challenges that the fund faces and strategies undertaken to mitigate them.