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.

Library Resources

resource title type year resource
Competition and Digital Financial Services 2019

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This resource appears in: ICT applications, Rural Financial Services, Rural Financial Services: General

These working papers investigate competition issues in digital financial services (DFS), providing both a survey of the main issues at each step of the DFS value chain as well as going in depth on topics such as digital data and credit card interchange fees. Drawing on both experience and research, these papers provide regulators and stakeholders alike a solid framework for understanding how competition policy, regulation and behaviour by market players can effect the level playing field of DFS in emerging markets.

Author Ariadne Plaitakis and Matthew Soursourian
Publisher CGAP Background Documents
Number of Pages 128 pages
Primary Language English (en)
Region / Country Global
Keywords digital financial services, Competition, value chain, digital data, Regulators, competition policy, market players
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Guidelines for micro-finance and credit services in support of small-scale fisheries in Asia Report 2019

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This resource appears in: Rural Financial Services

These Guidelines for increasing access of small-scale fisheries to credit and microfinance services in Asia have been developed to support the implementation of the Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries in the Context of Food Security and Poverty Eradication (SSF Guidelines).

The purpose of these guidelines is fourfold, i.e. to:

• Increase awareness about the financial service needs of small-scale fishers (SSF) for more sustainable and inclusive access to finance;

• Guide policy and decision makers in the Asia-Pacific region and elsewhere, to help introduce and incentivize financial services to small-scale fishers, with the ultimate objective to encourage investment in the industry and by doing so influence and strengthen sustainability, ecological and economic viability of these fisheries;

• Build capacity among financial service providers, fisherfolk organizations, NGOs, and concerned government agencies, to design and implement financial service products and programmes that suit the needs of small-scale fishing communities and enhance social protection; and

• Promote financial services that incentivize and reward a responsible and sustainable conduct of fishing, fish processing and marketing operations.

The document commences by laying out the background and context, purpose and target audience of these Guidelines. It describes why microfinance and credit are important for small scale fisheries and why many small-scale fishers are not currently financed, which includes a discussion of risks. The Guidelines suggest entry and leverage points for actors interested in supporting the access of financial services for SSFs and compares agriculture (smallholders) and SSF business characteristics.

Rural finance in Sierra Leone strengthened by IFAD projects – new report Report 2019

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This resource appears in: Rural Financial Services, Rural Financial Services: General, Rural outreach, Rural Invest

Rural development projects financed and supported by the International Fund for Agricultural Development (IFAD) expanded access to rural finance and increased agricultural production in Sierra Leone, despite the civil war (1991-2002) and Ebola epidemic (2014-2015), according to a new report released on 27 November 2019. The report prepared by the Independent Office of Evaluation of IFAD (IOE), reviews the past 17 years of work that IFAD carried out in partnership with the government of Sierra Leone, from 2003 to 2019.

According to the report’s findings, IFAD increased the reach of rural finance – including to remote areas – to an even larger group than originally planned. Over 280,000 households were reached through rural finance initiatives in the Northern, Southern and Eastern Provinces - more than 120 per cent of the envisaged target. 

Publisher IFAD
Number of Pages 64 pages
Primary Language English (en)
Region / Country Global
Sierra Leone
Keywords Rural Finance, Financial Institutions, Investments
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Harnessing the Power of Mobile Money to Achieve the Sustainable Development Goals Paper 2019

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This resource appears in: ICT applications, Rural Financial Services, Rural Financial Services: General

Exploring ways in which mobile money contributes to the digitalization of finance

Over the last decade, mobile money has been disrupting traditional financial services and transforming the lives of hundreds of millions of people across developing countries. Today, with over $1.3 billion a day processed by over 866 million registered accounts in 90 countries, mobile money has evolved into a broader payments platform that provides access to life-enhancing services, such as healthcare, education, employment, transportation and social protection. As national economies become increasingly dependent on digital technology, the power of mobile money to harness digital finance for sustainable development is strengthening.

This report brings together existing evidence to explore the ways in which mobile money is contributing to the digitalization of finance to achieve the Sustainable Development Goals (SDGs). The insights presented here illustrate the potential of mobile money to help achieve the 2030 targets by driving sustainable and inclusive growth, and providing solutions to some of the world’s most intractable development challenges.

Smallholder Households: Distinct Segments, Different Needs Paper 2019

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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:

  • The Commercializing segment is the primary market for financial solutions related to agricultural goals.
  • The Diversifying segment is in transition and generally values the standard portfolio of financial services.
  • To serve the more vulnerable Subsisting segment at scale, partnerships, technology, and comprehensive approaches to financial and nonfinancial services are key.
  • Agriculture exerts a strong influence on the identity and income of smallholder households. But their financial inclusion is not primarily determined by their agricultural livelihood profile.
  • Farm and nonfarm aspects of their livelihoods need to be considered to help each segment of smallholder households effectively build resilience and capture opportunities
Author Jamie Anderson, Ramesh Karuppusamy, Paul Enrico Neumann, Howard Miller; Ram Tamara
Publisher CGAP
Number of Pages 12 pages
Primary Language English (en)
Region / Country Global
Keywords Product Development, SME's
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INSURED - Insurance for rural resilience and economic development Brief 2019

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This resource appears in: Rural Financial Services, Rural Financial Services: General, Insurance, Agricultural insurance

The paper examines a technical assistance programme increasing the resilience of poor rural households to climate risks. It explores insurance for rural resilience and economic development. 

INSURED is a USD3.8 million programme financed by Sida (the Swedish International Development Cooperation Agency) and implemented by IFAD through the Platform for Agricultural Risk Management (PARM). The four‑year programme’s goal is threefold: – increase the resilience of poor rural households in the face of climate risks – build their capacity to manage risks – strengthen their livelihoods. The overall objective of INSURED is to protect the incomes of rural women and men and to promote investment in smallholder agriculture – by smallholders themselves and the public and private sectors, including financial service providers, value chain actors and governments. 

Key Facts

  • INSURED promotes climate and agricultural insurance as a cross-cutting tool in rural development 
  • USD 3.8 million
  • Financed by Sida
  • Four years: 2018-2021
  • Implemented by IFAD through PARM
  • Geographical focus: Global – with core activities in Cambodia, Indonesia, Uganda, Zambia
Author Massimo Giovanola, Technical Specialist at IFAD, and Emily Coleman, Financial Inclusion and Insurance Expert at IFAD
Publisher International Fund for Agricultural Development (IFAD)
Number of Pages 2 pages
Primary Language English (en)
Region / Country Global
Keywords rural resilience, Economic Development, Technical Assistance, smallholder investment in agriculture
Related Resources
Access to markets for small actors in the roots and tubers sector. Tailored financial services and climate risk management tools to link small farmers to markets Report 2019

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This resource appears in: Rural Financial Services, Risk management

The roots and tubers industry in sub-Saharan Africa has been growing steadily in recent years. Nevertheless, a series of challenges, including lack of access to finance and climate change related events, has prevented the majority of actors in these value chains, who are mainly small farmers and small processors, from taking advantage of such growth. In order to properly assess such challenges, the project “Strengthening linkages between small actors and buyers in the roots and tubers sector in Africa” conducted a series of studies to identify relevant gaps, constraints and opportunities to develop tailored financial products and risk management strategies for small farmers. The present publication provides a summary of the most important lessons learned, with the related policy recommendations.

Author Pera, M., Bavagnoli, M. & Benni, N.;
Publisher Food and Agricultural Organization of UN
Number of Pages 60 pages
Primary Language English (en)
Region / Country Global
Keywords Risk Management, Financial Inclusion, Access to Markets
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Fair Play: Ensuring Competition in Digital Financial Services Paper 2019

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This resource appears in: Rural Financial Services, Rural Financial Services: General, Collateral regulation, Prudential regulation

Providing guidance to financial sector regulators for identifying anti-competitive behavior

In many emerging economies, digital financial services (DFS) markets are limited to one or two major providers, reducing innovation, customer choice and potentially facilitating monopolistic or cartelistic behavior. Why are DFS markets prone to concentration? Is this a problem?

This primer applies a framework to help answer these questions and demonstrate how regulation can have a substantial impact on competitive dynamics in the DFS marketplace. The paper also proposes regulatory levers that policy makers can use to promote more competition. Looking ahead, a competitive landscape becomes especially important given the rising importance of customer data and the entry of large, multinational technology companies into DFS markets.

Author Matthew Soursourian & Ariadne Plaitakis
Publisher CGAP
Number of Pages 32 pages
Primary Language English (en)
Region / Country Global
Keywords Competition, digital financial services, emerging economies, customer choice, multinational technology
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Gender Self-Assessment Toolkit for Financial Service Providers Toolkit 2019

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This resource appears in: Rural Financial Services, Rural Financial Services: General, Gender, Inclusive finance

UNCDF, under its ASEAN regional and country programme, has developed a toolkit composed of an institutional gender self-assessment tool (GSAT) and a standardised process with facilitator guides to support FSPs in reviewing and evaluating their existing gender approach. This includes identifying the linkages that exist among: a) their business goals and profit; b) effectively serving the women’s market and; c) promoting women’s workforce participation and leadership. The toolkit aims to enhance FSPs’ institutional policies, practices and performance towards - Increasing targeted outreach to women clients through gender-sensitive products and services; and promoting workforce gender diversity in management and leadership.

Fair Play: Ensuring Competition in Digital Financial Services Paper 2019

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This resource appears in: ICT applications, Rural Financial Services

In many emerging economies, digital financial services markets are limited to one or two major providers, reducing innovation, customer choice and potentially facilitating monopolistic or cartelistic behavior. Why are DFS markets prone to concentration? Is this a problem? In this primer, CGAP applies a framework to help answer these questions and demonstrate how regulation can have a substantial impact on competitive dynamics in the DFS marketplace. The paper also proposes regulatory levers that policy makers can use to promote more competition. Looking ahead, a competitive landscape becomes especially important given the rising importance of customer data and the entry of large, multinational technology companies into DFS markets.

The argument for robust and fair competition is persuasive. Competition serves customers by promoting innovation and efficiencies, which lead to lower prices, greater choice, better quality services and improved products. At a national level, competition can curb excessive concentration of economic power and potentially reduce operational risks from service outages. From a financial inclusion perspective, more competition also increases the likelihood that DFS will reach low-income people currently excluded or poorly served by the financial sector.

Author Matthew Soursourian and Ariadne Plaitakis
Publisher Consultative Group to Assist the Poor (CGAP)
Number of Pages 32 pages
Primary Language English (en)
Region / Country Global
Keywords Competition, digital financial services
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Digital Financial Services in Nigeria: State of the Market Report 2019 Paper 2019

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This resource appears in: Business Support Services: General, ICT applications, Rural Financial Services

In-depth exploration of consumer profiles, the gender gap, and a review of DFS policy landscape.

The 2019 Digital Financial Services in Nigeria State of Market Report is the fourth in the series and presents consumer and gender profiles with more contextual relevance and linkages. It contains key insights from analysis of disaggregated data on banked, under-banked and unbanked adult Nigerians and also the widening gender gap. 

There is also a high-level review of the progress of market-enabling policy recommendations made in 2017. The section explores how much progress has been made so far, which recommendations have been implemented and which ones are outstanding. 

Author Olanrewaju Adelaja, Olubanjo Adetunji, Olawale Ajai, Timothy Aluko, Olayinka David-West, Nkemdilim Iheanachor, Emmanuel Ogbu, Omotayo Muritala, Ijeoma Nwagwu, Ibukun Taiwo, Samuel Umoh & Immanuel Umukoro
Publisher Sustainable and Inclusive Digital Financial Services (SIDFS)
Number of Pages 107 pages
Primary Language English (en)
Region / Country Global, Africa
Nigeria
Keywords digital financial services, Market Assessments, Sub-Saharan Africa, Nigeria
Related Resources
GFiN - One Year On Report 2019

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This resource appears in: Rural Financial Services

The Global Financial Inclusion Network (GFiN) is a network of international regulators and related organizations committed to supporting financial innovation and to creating a framework for co-operation between regulators to share experiences and approaches to innovation. The GFiN has rapidly grown over the past year from its 12 founding members, to be a global dialogue with 35 Member Regulators and 7 Observers from 21 jurisdictions. 

This report sets out what the GFiN has been doing over the past year, the challenges it has faced, achievements, and its ambitions for the future. It also aims to show that it is listening to stakeholders, and welcomes feedback in order to ensure that the GFiN continues to add value.

Key facts about the GFiN:

  • 35 members and 7 observers from 21 jurisdictions.
  • 99 responses from 26 jurisdictions received in response to the initial GFiN consultation.
  • 44 applications from 17 jurisdictions for the inaugural GFiN cross-border test pilot with 8 firms being selected to develop testing plans.
  • Nearly 60 representatives attended the first biannual meeting of the GFiN held in London in May.

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