Business Model Sustainability - Promising Pathways and Opportunities for Research: Understanding Profitability in Smallholder Finance

This brief, the third in the Learning Brief series on smallholder finance, intends to bring clarity to efforts currently undertaken by financial service providers (FSPs) to reach financial sustainability and to set the stage for future research. Drawing from a review of Mastercard Foundation rural and agricultural finance partner experiences - including documentation, interviews, and a survey of 17 financial service providers - and secondary research from external sources, this brief provides FSPs with evidence to guide their journey in achieving financial sustainability. The Lab’s analysis of different partner business models sorts these efforts into five different pathways to reach sustainability:

1. Scale;
2. Cross-subsidizing;
3. Long-term subsidies;
4. Shared costs;
5. Unit economics.

Learning Brief 1: The Business Case for Digitally-Enabled Smallholder Finance
Learning Brief 2: Better Together: Last Mile Partnerships for Smallholder Finance
Learning Brief 4: How To Influence Decision Makers in Agricultural Finance
Learning Brief 5: Big Data Could Mean Big Opportunity: Why We Should Stay Excited for Data Analytics in Smallholder Finance