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The World Bank and Financing for Agriculture

The World Bank and Financing for Agriculture Third Agribank Forum on Value Chain Financing Nairobi, Kenya, October 16-18, 2007 Session 6 – Dialogue on Experiences and Trends Renate Kloeppinger-Todd Rural Finance Advisor The World Bank Main Messages of the 2008 WDR on Agriculture

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The World Bank and Financing for Agriculture

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  1. The World Bank and Financing for Agriculture Third Agribank Forum on Value Chain FinancingNairobi, Kenya, October 16-18, 2007Session 6 – Dialogue on Experiences and Trends Renate Kloeppinger-Todd Rural Finance Advisor The World Bank

  2. Main Messages of the 2008 WDR on Agriculture • The lack of financial services in rural areas is a major obstacle to the growth of profitable agriculture and related activities • Building on innovations of local institutions in developing countries, rural financial services can be provided to smallholder farmers • Financial services can be effective tools for poverty reduction in rural areas

  3. However, there is a huge problem! • Nearly 3 billion poor people worldwide lack access to the basic financial services to manage their precarious lives • In two Indian states, 87% of marginal farmers have no access to formal credit and 71% have no access to a savings account • In Nepal, only 16% of rural households have a bank account • In Bangladesh, only 27% of small and marginal farmers have access to formal sources of credit.

  4. What does the WDR propose to increase financing for agriculture? • Financial leasing for investment finance • Establish credit reporting bureaus • Explore and pilot-test technological innovations • Support to institution-building and proper product development • Working through supply chains • Working with public and recently-privatized agriculture development banks

  5. Past and ongoing World Bank programs • Support to “good” policies and an enabling environment • Interest rate policies • Laws on land and other property rights • Establishment of registries • Development of risk management instruments • Index-based weather insurance • Hedging instruments for commodity price risks ……continued

  6. Past and ongoing World Bank programs (continued) • Determination and dissemination of good practices for different delivery channels • Leasing • Financial cooperatives • Community-based organizations • New initiative on Financing for Agriculture • Credit risk management • Use of innovations

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