Analysis of GIZ Approaches to Improve Access to Agricultural Finance

Analysis of GIZ Approaches to Improve Access to Agricultural Finance

Agriculture is key to poverty reduction and ending hunger in Africa. It is a precondition for important economic activities such as food processing and trading to take place, therefore constituting a critical factor in overall rural economic transformation. For agriculture to function well and to generate employment in rural areas, it needs to have access to demand-driven financial services. Lacking finance critically constrains the professionalization of the agri-food sector.

The chronic low level of agricultural lending has resulted in low levels of agricultural investment, which in turn have impeded increases in productivity.

The objective of the study was to:

  • Improve knowledge management and sharing of lessons learned

  • Provide an overview of the characteristics of the GIZ programmes surveyed and their involvement in agricultural finance

A glimpse at the results:

  • The design of access to finance activities is mostly ad-hoc and retrofitted into existing programmes

  • Agricultural finance is highly relevant for programmes

  • Low levels of resource allocation in terms of human resources and funding

  • Most projects are still in a pilot stage

  • Agricultural finance in programme contexts do exist in half of the programmes analysed but information on the quality and status of implementation of these policies is unclear

Programmes reported that various actors provided financial services to the agricultural value chain, but only four found the offered services and products to be adequate and tailored to needs. In almost half of the countries where the surveyed programmes operated other stakeholders (i.e. not the programmes themselves) implemented financial training activities. In most programme contexts governments provided both direct support (e.g. extension services and free or subsidised inputs) and indirect support (e.g. research and rural infrastructure). Land tenure systems are a challenge for most countries.

The study was jointly commissioned by the Agribusiness and Food Security working group of SNRD Africa, processed by the subgroup on Access to Finance and Food Processing with Waqas Malik, and the Sector Project Agricultural Trade and Value Chains.