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Pathways to prosperity: 2019 rural and agricultural finance state of the sector report

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Despite significant progress in the rural agricultural finance sector, financial service providers are still unable to meet the full USD 240 billion demand of rural households for agricultural and non-agricultural finance. The latest data suggests that providers are currently supplying approximately USD 70 billion. This leaves around USD 170 billion —or 70%—of the global demand for smallholder finance unmet. This gap cuts across all geographic regions and financing types, but is particularly concentrated in long-term agricultural finance, for which 98% of global demand remains unmet. As with the direct-to-smallholder finance market, there is a large gap when it comes to lending to agricultural SMEs. There is no comprehensive global sizing of the demand and supply for lending to agricultural SMEs, but recent analyses have painted a stronger picture of how the market functions and illustrate why—despite agricultural SMEs playing a vital role in economic development—financial service providers limit their lending to these clients.

In recent years, new financing products have begun to penetrate rural markets. These include the rise of lending “innovators”—fintechs and mobile network operators that deliver credit directly to rural households through digital channels, holding the associated credit risk on their own balance sheet. While these innovators have great potential to address customer pain points and reach unserved customer segments, they currently represent a small portion of the lending market. At the same time, there’s been an emergence of new models of agricultural insurance, digital payments, and savings accounts. With greater breadth, depth and innovation in rural financial services than ever before there are new opportunities emerging to close the persistent rural finance gap.

Document Information

Document Type Report
Author Matt Shakhovskoy of ISF Advisors, and Clara Colina and Mikael Clason Höök of the Mastercard Foundation Rural and Agricultural Finance Learning Lab
Year of Publication 2019
Publisher The Mastercard Foundation, USAID, and Small Foundation
Number of Pages 61 pages
Region / Country Global /
Primary Language English (en)
Keywords Rural and Agriculture Finance
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