Adoption of agricultural innovations through non-traditional financial services
Agriculture is the backbone of many developing country economies, but the capacity of resource-poor smallholder farmers to adopt agricultural innovations is curtailed by lack of access to adequate financial services. International experts estimate that there is a global shortfall of US$400 billion (roughly CA$540 billion) to cover the current smallholder farmer demand for financing. It is unlikely that this will be covered by increasing the reach of traditional financial services (such as credit from banks) in the short and midterm.
There is a growing interest from the development community, donors, banks, and financial institutions to explore new kinds of financial services to reach these underserved groups and support the efficiency of the agricultural sector. Non-traditional financial services bundle lending, savings, and insurance services with investment products, including technical assistance and support and networking to enable farmers, small enterprises, and others in the production process to connect with markets.
This project, implemented by the Mennonite Economic Development Associates of Canada, will assess the potential of non-traditional financial services to enable large-scale adoption of agricultural innovations among men and women smallholder farmers in South Asia, Latin America, and East Africa. Researchers will analyze and systematize current non-traditional financial services that are presently implemented by the Financing for Development (FFD) community. The FFD process is a massive undertaking by the entire international community, including UN member states and multilateral institutions backed by civil society, the private sector, and philanthropy, to update global financial flows, tools, and mechanisms in order to pay for new development initiatives around the world.
The project’s researchers will work alongside finance stakeholders such as banks, microfinance institutions, insurance brokers, and impact investors as well as researchers and practitioners in the field. They will develop concrete, evidence-based policy and programming recommendations on the use of non-traditional financial services to foster agricultural innovation uptake by local stakeholders and to inform policymakers and donors at the national and global levels.