What Modes of Intervention Can Strengthen the Contribution of Microfinance to the Financing of Agriculture?

This note examines modes of financial interventions in agriculture, especially focusing on the situation in West Africa.

The note states that:

• The financing of agriculture remains a strong constraint in the modernization process;
• As a result of the decentralization of banks and the drastic reduction in public funding, microfinance is the only supply of financial services accessible to rural populations and farming households in many rural areas;
• However, microfinance systems provide only a partial response to the financing needs of agricultural activities;
• The question is - what modes of intervention might lead to the supplying of sustainable financial services suited to the needs of agriculture?

The note:

• Consists of a brief historical reminder of the evolution of modes of intervention in rural financing since the independence;
• Analyzes the main current modes of intervention of donors in rural financial services with regard to their effect on the financing of agricultural activities;
• Outlines paths for the improvement of the contribution of microfinance to the financing of agriculture.

The note recommends:

• Addressing the function of financing from the economic and financial point of view and rendering it autonomous in specific institutions;
• Continuing support to microfinance and promoting its diversity;
• Renewing efforts in innovation to create appropriate models;
• Improving tools and procedures for guaranteeing loans;
• Enhancing meetings between the agricultural and microfinance sectors;
• Adapting donor intervention modes.