August 2017

In this Issue

From the Editor

Dear RFILC members,

We are thrilled to bring to your attention a new report commissioned by the MasterCard Foundation “Responsible Agriculture Finance for Smallholder Farmers in Tanzania and Uganda”. This report analyses input credit for smallholder farmers in Tanzania and Uganda. Agricultural inputs, either cash or in-kind, are provided on credit and the farmer reimburses the provider after harvest. Input credit products for farmers in Tanzania and Uganda are often ‘bundled’ with other compulsory services and fees. As a result, smallholder farmers may not fully understand the pricing structure and compulsory nature of bundled credit products, and may be taking on more risk than they can handle. It appears there may be a number of smallholder farmers who are indeed struggling to comprehend input credit bundles and the associated relatively high but variable risks of input credit. The objective of the study was to improve The MasterCard Foundation’s (MCF) understanding of how agricultural finance can be delivered in a responsible way in line with the Client Protection Principles. It was found that MCF could encourage governments: to establish price ceilings and price floors on agricultural products; to relax current restrictions on micro-finance institutions; to create a certification program for crop inputs, and to set up a formalized customer complaints department about concerns with financial service providers.

Secondly, International Institute for Sustainable Development (IISD) has published a paper on “Promoting gender equality in foreign agricultural investments: Lessons from voluntary sustainability standards”. This paper contributes to the emerging literature on the gendered impacts of the contemporary wave of foreign agricultural investments. The outcomes of agricultural investments for men and women often differ in rural areas of the Global South where gender inequalities are persistent. The evidence presented in this paper indicates that these inequalities are often exacerbated by foreign agricultural investments, unless investors and host country governments work to ensure that investment contracts address the needs of women farmers and agricultural workers. The purposes of this paper are three-fold. First, it seeks to analyze the gender-related content of the voluntary sustainability standards (VSSs) and the responsible investment frameworks. Second, it attempts to answer the question “Do VSSs improve gender equality?” And third, it aims to explore how the responsible investment frameworks can build on the successes and failures of the VSSs to improve gender equality in agricultural investment projects. It uses the experiences of VSSs to provide guidance for responsible investment frameworks because the latter are quite new, and only scant anecdotal evidence about their impacts is available. The research is based on a desk review of the certification criteria and principles of five major VSS initiatives and five responsible investment frameworks, a literature review of the impacts of VSS initiatives on gender inequalities, and a close reading of policy reports and scholarly literature on the main obstacles to gender equality in agriculture, particularly in contexts of foreign direct investment.

Finally, African Microfinance Week 2017 is a conference organised by the African networks AMT (African Microfinance Transparency), MAIN (Microfinance African Institutions Network), AFRACA (African Rural & Agricultural Credit Association) and by ADA with the support of the Luxembourg Cooperation. This year, the conference will take place from the 9th to 13th October, 2017, in Addis Ababa, Ethiopia, on the following topic: “Creating value for SMEs: a new frontier for inclusive finance”. The theme will focus on the subject of mesofinance and therefore the development of micro, small and medium-sized enterprises (MSMEs). For more information, click here.

With best regards,

The RFILC editorial team

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The Rural Finance and Investment Learning Centre is a part of the CABFIN Partnership Project which aims to promote and facilitate capacity building in rural finance. The concerns of rural finance are to ensure that people living in rural areas have access to financial services such as deposit and money transfer facilities, insurance and loan products. Effective use of these services can help to improve livelihoods and reduce rural poverty. The following CABFIN Partners have provided financial support to the RFILC: