Paper

Digitizing Value Chain Finance for Smallholder Farmers

Boosting productivity and tightening value chains through digital financial services

The digitization of value chain finance—financial services that flow to or through any point in a value chain—is changing the way smallholders access the financial tools necessary to invest in their farms, manage risk, and transact with markets. This Focus Note explores opportunities and emerging models in digital value chain finance (DVCF), particularly new technologies that can break down barriers to delivering financial services to a greater number of smallholder farmers. It identifies three key use cases for digital financial services in agricultural value chains:

  1. Improving the efficiency of financial transactions. From bulk payments between buyers of agricultural commodities and their suppliers to digitized loan disbursements and repayments, digital payments offer some advantages over cash—while also posing new challenges of their own. 
  2. Overcoming barriers to providing financial services. Branchless banking and new data on customers allow for digitizing savings, credit, and insurance products—making them more affordable and accessible to a greater number of smallholders. 
  3. Improving market opportunities. Digital trading platforms, digital warehouse receipts, and digital invoice discounting help smallholders to maximize the price they get for their crops.

About this Publication

By Mattern, M., Ramírez, R. M.
Published