Rural and Farmer Finance: An International Perspective (With Particular Reference to Sub Saharan Africa)

This paper reviews current experiences and issues in rural finance particularly, as they relate to smallholder farmers' access to seasonal capital for crop production and states that loan products are often structured in ways that make them particularly unsuited to seasonal lending.

The authors argue that:

• Alternative mechanisms for financing seasonal inputs need to be placed in the context of smallholder farmers' broader needs for liquidity in agricultural finance;
• Formal lending to smallholders has often suffered from an unfavourable investment climate, politicisation, poor management, lack of emphasis on savings mobilisation, and unsustainably low interest rates.

Drawing from various MFIs which lend directly to agriculture, the document states that the collapse of formal lending programmes in sub Saharan Africa has accentuated and left a gap in seasonal finance, particularly for grain crop production. The paper concludes that many aspects of the environment in which a financial organisation operates are important to its activities and performance and suggests possible approaches for increasing access to seasonal finance under different levels of agricultural and non-agricultural activities in an area.