Skip to Content

Financial inclusion for the world’s rural poor

The vast majority of rural people do not have reliable, secure ways to save money, protect and build assets, or transfer funds. This is particularly true for vulnerable groups, such as women, youth, and displaced people.

Basic formal financial services still reach only 10 per cent of rural communities. Weak infrastructure, the limited capacity of financial service providers, and low levels of client education all contribute to this complex problem.

An engine of rural transformation

IFAD recognizes the vast potential of rural finance to improve the livelihoods of rural people.

Over the past 30 years, the development of financial systems has had an enormous impact on rural livelihoods. Ground-breaking institutions and new instruments have allowed financial services to grow and broaden their reach.

Technology has allowed clients in remote communities to access a wider range of financial products.

But there is still much to be done. In a changing global economy, amidst financial crises, volatile food and agricultural commodity prices, and the perils of climate change, inclusive rural finance remains a crucial element in rural transformation.

Managing risks and leveraging investments

There are many inherent risks affecting smallholder farmers that discourage the private sector from investing.

Financial institutions often perceive small-scale agriculture as being too  risky and are reluctant to lend farmers money. An additional challenge is that farmers are reluctant to borrow and invest, because of their difficulty in managing risks such as weather shocks and livestock disease.

IFAD has worked on rural finance systems in more than 70 countries for over four decades, and has invested over US$3 billion in rural finance systems.

IFAD supports the Agricultural Risk Management (ARM) approach that matches supply and demand, and leverages rural financing and investment in smallholder farmers.

IFAD hosts the Platform for Agricultural Risk Management (PARM), a G20 initiative that brings a comprehensive risk management approach and process where risks in agriculture are assessed, prioritized, and tackled in a structured and well-coordinated way.

PARM promotes:

  • rigorous risk assessments; and
  • a holistic, demand-driven approach for integrating agricultural risk management into national agricultural policies and investment plans.

The power of microfinance and remittances

IFAD-supported projects increase access to financial services and loans, so that small-scale producers can invest in their businesses and increase their productivity.

As one of the leading microfinance funders worldwide, IFAD's ongoing investments in rural finance at 31 December 2017 was around US$1.14 billion. Approximately 13 per cent of our ongoing investment portfolio is dedicated to rural finance.

Remittances are a powerful instrument for fostering financial inclusion and livelihood development in rural communities. Our multi-donor Financing Facility for Remittances (FFR) aims to maximize the impact of remittances on development, and promotes migrants’ engagement in their countries of origin.

In depth

Remittances and migration

For over a century, people have been moving from rural to urban areas, and across national borders in search of better opportunities. Of the 250 million international migrants, approximately 200 million leave home to work and send remittances home to their families.


Small credits foster rural entrepreneurship in Guinea

Mohamed enjoys welcoming visitors to his vegetables garden in Fria town, in Guinea, and is proud to show every crop he has been growing. This 32-year-old rural entrepreneur recalls how his business succeeded thanks to an unexpected opportunity while he was pursuing a civil servant career.



Adapted Rural Financing Services Promotion Project
Read More


Promoting Agricultural Commercialization and Enterprises Project
Read More


Infrastructure and Rural Finance Support Programme
Read More

Related news

Eswatini and IFAD partner to boost inclusive financial services for smallholder farmers

October 2019 - NEWS
About 30,900 rural people in the Kingdom of Eswatini will benefit from a new US$38.5 million project that aims to improve the prosperity and resilience of poor and vulnerable smallholder farmers and micro-entrepreneurs in the country.

New rural finance project to help boost rural enterprise sector in Mozambique

July 2019 - NEWS
A new Rural Enterprise Finance Project (REFP), which will help more than 287,700 rural people engaged in agriculture, fisheries and small and medium-sized enterprises in 10 provinces improve their access to national and regional markets, was launched on 15 July in Maputo, the capital of Mozambique.

Innovative impact fund to create jobs for rural youth in developing countries

February 2019 - NEWS
An impact fund with an innovative approach for attracting much needed capital to the rural areas of developing countries will be launched today at the annual meeting of Member States of the International Fund for Agricultural Development (IFAD).

Related publications

Research Series Issue 37: Determinants of cofinancing in IFAD-funded projects - A call to rethink development interventions

May 2019
This study is an analysis of what drives cofinancing in IFAD-supported programmes/projects, covering 20 years of data from 559 projects in 109 countries.

PRIME Africa

April 2019

Platform for Remittances, Investments and Migrants’ Entrepreneurship in Africa

IFAD in Sudan: Linking rural women with finance, technology and markets

December 2018
Since 1979, IFAD has worked with the Government of Sudan to develop structural reforms that tackle the roots of poverty. IFAD has continued to support rural people in Sudan through investment projects focusing on sustainable resource management, value-chain development and support to farmer organizations. 

Related documents

Rural Finance Policy

August 2009 - CORPORATE
This new IFAD Rural Finance Policy builds on, updates and supersedes the IFAD Rural Finance Policy of 2000, responding to the recommendations made in the corporatelevel evaluation of 2006. It incorporates the major thrusts of the earlier policy and offers a framework for IFAD’s rural finance portfolio. The new policy provides the guiding principles for rural finance operations at the three levels of intervention – micro, meso and macro – and gives further detail for IFAD’s governing bodies, development partners and the broader public on the Fund’s approach to rural finance.

IFAD Policy on improving access to land and tenure security

December 2008 - CORPORATE

Secure access to productive land is critical to the millions of poor people living in rural areas and depending on agriculture, livestock or forests for their livelihood. 

It reduces their vulnerability to hunger and poverty; influences their capacity to invest in their productive activities and in the sustainable management of their resources; enhances their prospects for better livelihoods; and helps them develop more equitable relations with the rest of their society, thus contributing to justice, peace and sustainable development.

IFAD Policy on supervision and implementation support

September 2007 - CORPORATE

Improving the quality of project implementation and achieving better results on the ground are priorities for IFAD, achieved largely through effective supervision and well-directed implementation support. In recognition of this, IFAD has made a series of efforts to examine, clarify and enhance the role of supervision and implementation support in its operations. These efforts acquired a new urgency in the context of the drive to achieve the Millennium Development Goals and the consequent changes in the international development architecture. 

The Paris Declaration on Aid Effectiveness emphasizes systematic support for nationally owned strategies for attaining development results, the increased use of national administration systems, and more jointly coordinated and predictable actions among aid donors. As a signatory of the Paris Declaration, IFAD is responding to the challenges of harmonization and alignment by positioning itself fully within this new development context and seeking to provide optimal support to member countries in order to reduce rural poverty. Addressing the issues of project implementation through improved supervision and implementation support is part of that response.