The updated IFAD Rural Finance Policy (RFP) was approved by the IFAD Executive Board in 2009. It is aligned with changes in IFAD’s operating modalities that have occurred since the inception of the RFP in 2000 and addresses the specific recommendations made in the agreement at completion point of the corporate-level evaluation of the earlier RFP.
The updated RFP provides guidelines to IFAD decision makers, consultants and partner organizations to ensure the development of a coherent and effective rural finance sector. These guidelines are intended to build clients’ skills to effectively participate in the ownership and oversight of local financial institutions; promote financial literacy training; and support protective arrangements for savers, borrowers and lending institutions.
The RFP emphasizes the importance of strengthening financial service providers in rural areas, helping savings-based models of community-managed loan funds achieve promising results, and avoiding distortions of financial markets. The updated RFP also clarifies IFAD’s approach to interest rate subsidies, credit lines to retail and wholesale finance institutions, and professionally managed credit guarantees.
Building on IFAD’s experience in rural finance and the good practices developed over time within the sector, six guiding principles are at the core of IFAD’s approach and support to rural finance. Throughout its interventions in rural finance, IFAD works to:
- Support access to a variety of financial services, including savings, credit, remittances and insurance.
- Promote a wide range of financial institutions, models and delivery channels.
- Support demand-driven and innovative approaches.
- Encourage—in collaboration with private sector partners—market-based approaches that strengthen rural financial markets, avoid distortions in the financial sector and leverage IFAD’s resources.
- Develop and support long-term strategies focusing on sustainability and poverty outreach; and
- Participate in policy dialogues that promote an enabling environment for rural finance.
The IFAD Rural Finance Policy is available in English, French, Spanish and Arabic.
