Rural Financial Services
Financial intermediation is an important process through which funds are channelled from suppliers to prospective users. In most countries a diversity of institutions, instruments and markets have evolved to provide financial intermediation services. These include formal institutions such as banks, semi-formal institutions such as cooperatives and informal providers such as traders and moneylenders.
Providing financial services in rural areas is a particular challenge as agriculture has unique characteristics of dependence on natural resources, long production cycles and vulnerability to risks, while scattered populations greatly increase operating costs. This Learning Center aims to bring together resources that can help financial service providers to operate efficiently in this environment and increase their outreach in a sustainable manner.
|Smallholder Households: Distinct Segments, Different Needs||Paper||2019|
This resource appears in: Rural Financial Services
The 500 million smallholder households worldwide represent a large pool of potential financial services customers. However, they are not a monolithic group. To create and provide appropriate and desirable products for the segments within this group, financial services providers, government bodies, and agricultural development partners need to understand the segments they want to serve.
This Focus Note proposes an approach that distinguishes three segments of smallholder households—Subsisting, Commercializing, and Diversifying—according to their crop and livestock sales, amount of agricultural land, and smallholder livelihood profile. Using data from nationally representative surveys of smallholder households in Mozambique, Uganda, Tanzania, Côte d’Ivoire, Nigeria, and Bangladesh, the analysis estimates the market size of each segment and outlines recommendations on high-value financial solutions. Key findings include: