Strengthening financial services for roots and tubers value chains development in Africa

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The demand for roots and tubers derived products has grown in the past decade, globally and regionally, leading to an increase in production in several African countries, where the majority of the producers are smallholder farmers. According to World Bank data (World Bank, 2013), this demand is expected to continue growing over the next two decades. In addition to this, governments in Africa are placing the commercialization of food staples at the center of national agricultural development strategies.

In spite of these opportunities for smallholders to commercialize their products in new markets, roots and tubers value chains in the region reain loose, fragmented and informal. Smallholders – both producers and processors – have a relatively weak collective bargaining power; they utilize low yield varieties, and their production and processing skills are weak, while the margins on the added value are often not paid off.

Small-scale producers and processors within roots and tubers value chains tend to rely mainly on informal financial service providers (such as informal moneylenders, friends and family, village loans and savings associations) to compensate for the lack of engagement of commercial banks and other formal financial institutions, who are unwilling (and often unable, due to gaps in technical capacity) to accurately target these actors with a tailored offer of financial services. A series of interventions are required to turn farmers and processors into more creditworthy and reliable clients for formal financial institutions. At the same time, measures are required to provide these financial institutions with tools and methodologies that can assist them in designing profitable and sustainable financial services that are suitable to the needs of roots and tubers smallholders and processors

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