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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.


Spotlight

Financing for young farmers in the Republic of Moldova

Young women and men in rural areas of the Republic of Moldova are making good use of advantageous credit lines and other benefits offered by an IFADsupported project. 

Projects

Project

Benin

Adapted Rural Financing Services Promotion Project
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Project

Bangladesh

Promoting Agricultural Commercialization and Enterprises Project
Read More
Project

Armenia

Infrastructure and Rural Finance Support Programme
Read More

Related news

Ground-breaking research helps make insurance available to smallholder farmers

janvier 2018 - STORY
Farming is an uncertain and risky business, especially for poor smallholders in remote areas of developing countries. However, a new study shows how data gathered by satellite could help poor farmers manage their risks more effectively through index insurance.

L’inclusion financière est une clé pour assurer la sécurité alimentaire et transformer les zones rurales en Afrique orientale et australe

mai 2017 - NEWS
Le Fonds international de développement agricole (FIDA) et le gouvernement de l’Ouganda réuniront des décideurs politiques et des agents de développement à  Kampala, Ouganda, du 22 au 25 novembre pour discuter des approches novatrices pour élargir l'accès aux services financiers pour les populations rurales.

Le Burundi reçoit un don de 24,9 millions d’USD du FIDA pour renforcer l'inclusion financière dans les zones rurales

octobre 2017 - NEWS
Plus de 99 200 ménages ruraux burundais vivant dans 17 provinces bénéficieront d'un accord de financement signé aujourd'hui entre le Fonds international de développement agricole (FIDA) et le Burundi, qui améliorera l’accès aux services financiers  dans les zones rurales où la demande dépasse largement l'offre.  Une attention particulière sera accordée aux groupes les plus vulnérables, y compris les femmes et les jeunes.

Related publications

Travailleurs migrants et transferts de fonds: Marchés et flux européens

juin 2015
Les conclusions de ce rapport s’appuient sur une série d’études et d’enquêtes commandées par le Fonds international de développement agricole (FIDA) et sur des analyses menées par le FIDA à partir de données de la Banque mondiale. Les membres du Mécanisme de financement pour l’envoi de fonds, administré par le FIDA ont contribué au financement de ce rapport, notamment la Commission européenne, le Gouvernement luxembourgeois, le Ministère espagnol des affaires étrangères et de la coopération, la Direction du développement et de la coopération de la Confédération suisse et le Fonds d’équipement des Nations Unies.
LANGUAGES: English, French

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septembre 2015
Rapport du Fonds international de développement agricole et du Groupe Banque mondiale pour le Partenariat mondial du G20 pour l’inclusion financière
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Toolkit: Lines of credit

octobre 2014
La ligne de crédit est un prêt consenti à une institution financière participante, qui en rétrocède le produit à ses clients sous forme de prêts assortis d’intérêts. 
LANGUAGES: English, French

Related documents

Politique en matière de finance rurale

TAGS: RURAL FINANCE
TYPE: Policies and Strategies, Policy

Supervision et appui à l'exécution

TAGS: RURAL FINANCE
TYPE: Policies and Strategies, Policy

Contact us

For questions please contact Michael Hamp,

Lead Technical Specialist, Inclusive Rural Financial Services.

+39 0654592807 m.hamp@ifad.org