Some enterprises in rural areas are too big to access microfinance and too small to receive loans from commercial banks. <br/>Photo: ©IFAD/GMB Akash

Some enterprises in rural areas are too big to access microfinance and too small to receive loans from commercial banks.
Photo: ©IFAD/GMB Akash

New investment network to support smallholders

There is a huge financing gap in rural areas, according to IFAD. The Smallholder Agriculture Finance and Investment Network (SAFIN) now aims to help bridge that financing gap in order to support smallholder farming and rural enterprises.

A new network aims to help bridge the estimated USD 150 billion financing gap that prevents small rural producers and businesses in developing countries from growing their operations and strengthening rural economies.

This was announced in late January 2017 by Kanayo F. Nwanze, President of the International Fund for Agricultural Development (IFAD) and Italy’s Deputy Minister of Economy and Finance at the international conference “Investing in inclusive rural transformation: innovative approaches to financing” in Rome, Italy.

The Smallholder Agriculture Finance and Investment Network (SAFIN) will bring together private, public and philanthropic sectors and rural farmers and enterprises to resolve rural financing chal-lenges with coordinated action and investment.

The announcement to create SAFIN comes at a critical time, with political changes and humanitar-ian crises – such as war, migration and natural disasters - reshaping global priorities and poten-tially diverting money away from rural development.

Three-quarters of the world’s poorest people live in rural areas of developing countries, with the majority of them dependent on smallholder farming and associated industries for their livelihoods. A lack of access to financial services prevents them from growing their businesses, earning decent incomes and developing their communities and economies.

Often referred to as the “missing middle”, small- and medium-sized enterprises in rural areas are often considered too big to access microfinance and too small to receive loans from commercial banks, who view smallholder farming and rural enterprises as risky investments.

The conference “Investing in inclusive rural transformation: innovative approaches to financing” was co-organised by IFAD, the Italian Ministry of Economy and Finance, the Brookings Institution and the University of Warwick.

(IFAD/ile)