Access to financial services can be a lynchpin in driving economic growth; however, the Consultative Group to Assist the Poor estimates that nearly 500 million smallholder farmers in developing countries are financially excluded or underserved.
A household’s ability to improve their financial management skills and access savings and credit facilities is vital to achieving financial security and increasing household incomes.
Helping Underserved Populations Access Financial Services
Agricultural value chains that do not connect producers to markets often prevent the farmers from accessing essential inputs and markets and executing business transactions.
For more than 50 years, ACDI/VOCA’s mission has been to help underserved populations access financial services that allow them to make productive investments, which can help lift them out of poverty.
We have implemented a range of successful interventions that equip producers with appropriate financial solutions and strong connections with markets. We have grown microfinance institutions and facilitated loans for small and medium-sized enterprises. We have also developed specialized financing structures and created agricultural cooperative finance networks.
Facilitating Financial Connections and Investment in Value Chains
All actors along the agricultural value chain must have the tools and connections to engage financially and grow their businesses. Our value chain finance guide helps actors design and implement financing solutions that will enable them to benefit from market opportunities.
For farmers who are ready to more actively engage with U.S. or international markets, we build their capacity for business and financial planning, enabling them to apply for the loans they need to grow. We also engage with and train microfinance and small and medium-sized enterprise (SME) finance providers in developing products and services to serve this population.
As farmers, producer associations, and cooperatives develop the capacity to be active commercial market players, we shift our focus to supply more sophisticated financial services. For example, we work to more directly finance the cultivation and export of coffee and cocoa or to close the gaps in a commodity value chain.
This value chain approach has resulted in a wide range of successful investments, including the following:
- Cooperatives connected with international buyers and financing to access new markets
- Expansion of outgrower networks and improved smallholder access to credit
- Coordination of tri-partite agreements to finance agricultural equipment
- Enabling lead input dealers to extend credit to smallholder clients
Building the Financial Skills of Disadvantaged Groups
Enabling Financial Services to Reach Underserved Markets
Building robust financial ecosystems in developing economies means training and supporting financial institutions to see the agricultural sector as an attractive market for their services.
We assess financial institutions, including traditional banks and microfinance institutions, to identify areas where they need to build capacity to serve vulnerable groups with more appropriate products. We train staff, helping them understand agricultural finance, evaluate a borrower’s creditworthiness, and structure appropriate financial products that reduce the risks for lenders and borrowers.
We connect individuals, businesses, organizations, and communities to the financial technical expertise they need including world-class consultants and volunteer experts. For example, we have recruited over 200 financial professionals from the United States who have volunteered their time to equip these institutions through the USAID Farmer-to-Farmer program.
We have developed and implemented a range of innovative financial solutions that enable institutions to provide farmers and agribusinesses with the services they need.
- Development of the Profit Planner software to help financial institutions lend to farmers
- Support of grain warehouse receipt systems that allow farmers to use grain as an asset to secure loans
- Implementation of mobile money solutions that cheaply and transparently connect the poor and underserved populations to secure financial services
Frequently there are policy and regulatory reforms needed to improve the flow of financial services into these rural and marginalized communities. We assist financial institutions to engage with policymakers on these issues to advocate for reforms in laws and regulations.
Supporting Financial Institutions and International Initiatives
For 25 years, ACDI/VOCA has been a principal innovator in founding, building, operating, and transforming 13 financial institutions in Central Asia, Eastern Europe, the Caucuses, Russia, Iraq, and Afghanistan. Our experience encompasses microfinance institutions, SME lenders, and an apex funder providing loans to multiple microfinance institutions.
We maintain close relations with nine of these financial institutions, which have formed the ACDI/VOCA Network of Affiliated Financial Institutions (AFIs). Members of the network have a combined total of nearly $300 million in outstanding loans to 180,000 clients, of whom 44 percent are women. Savings accounts exceed $7 million with 12,000 savers.
We are also a founding member of the international Better Than Cash Alliance and a member of the Smart Campaign for implementing client protection in microfinance.
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- Ethiopia – Agricultural Growth Program-Agribusiness and Market Development (AGP-AMDe)
- Ghana – Agricultural Development and Value Chain Enhancement II (ADVANCE II) Project
- Iraq – Foras
- Kyrgyzstan – Women’s Leadership in Small and Medium Enterprises Program
- Mozambique – Livelihoods Empowerment and Development (LEAD)
- Sierra Leone – Sustainable Nutrition and Agriculture Promotion (SNAP) Program
- Tanzania – Tanzania Staples Value Chain (NAFAKA)
- Zambia – Production, Finance, and Improved Technology Plus (PROFIT+)
A Selection of Past Projects
- Afghanistan – Agricultural Credit Enhancement (ACE)
- Afghanistan – Agriculture, Rural Investment and Enterprise Strengthening Program (ARIES)
- Afghanistan – Community Development Agriculture Program (CDA)
- Azerbaijan – Central Area Economic Opportunities (CEO) Program
- Azerbaijan – Enterprise Development and Training Program (EDTP)
- Azerbaijan – Rural Credit Project
- Azerbaijan – SME Support through Financial Sector Development Project
- Bolivia – Agrocapital
- Cape Verde – Microfinance Technical Support Project
- Central Asia – Central Asia Micro Finance Alliance (CAMFA)
- Central Asia – Central Asia Microfinance Alliance (CAMFA) II
- China – Planning Assistance for Rural Credit Cooperatives
- Egypt – MicroStart
- Egypt – Rural Cottage Industries Development Project
- Global – Financial Integration, Economic Leveraging, Broad-Based Dissemination Program (FIELD-Support Program)
- Global – SEGIR Financial Sector II: Support for Economic Growth and Institutional Reform
- Honduras – Farmer Access to Credit
- Honduras – Financiera de Cooperativas Agropecuarias (FINACOOP)
- Iraq – Access to Credit Project
- Kazakhstan – KazMicroFinance LLC (KMF)
- Kyrgyzstan – Technical Assistance to the Bai-Tushum Financial Foundation
- Moldova & Ukraine – RAISE PLUS Agricultural Policy, Legal and Regulatory Reform Project
- Philippines – Cooperative Marketing Project
- Russia – Cooperative Development Program (CDP)
- Russia – Mobilizing Agricultural Credit Program (MAC)
- Russia – North Caucasus Agricultural Development Project
- Russia – North Caucasus Rural Credit Cooperatives & Agribusiness Development Program (NC-RCC&AD)
- Russia – Sakhalin Regional Microcredit Program
- South Africa — Community Entrepreneurship & Business Initiative (CEBI)
- South Sudan – Generating Economic Development through Microfinance in Southern Sudan (GEMSS)
- Tajikistan – Productive Agriculture Project
- Tajikistan & Uzbekistan – Ferghana Valley Regional Microfinance Program (FVRM)
- Ukraine – Grain Warehouse Receipt Program
- West Bank/Gaza – Small and Microfinance Assistance for Recovery and Transition Program (SMART)