This training guide has been designed for use in introductory rural and microfinance training courses. While the fundamentals of development finance and approaches in microfinance apply to rural finance, there are particular issues and characteristics that must be understood and taken into account in order to address rural, and in particular agricultural, finance. The material is organized into 10 teaching modules each of which should take approximately one-half day to deliver. The first 5 modules are designed to give a broad understanding of the key issues and approaches. The last 5 modules are more advanced and generally build from the broad concepts of the first modules into a focus on the important operational issues of cash flow and risk assessment and on specific product innovations and approaches used in rural and agricultural finance. The modules are organised in a logical sequence but the course facilitator can be selective in including or excluding modules based upon the length of training and the needs and interests of the participants. The material, which is still under development, presumes that the participants have a basic understanding of financial services (microfinance, development finance, banking and/or rural economic development). Some knowledge of market development services would also be helpful. It is aimed primarily at people who work in rural financial institutions, government and non-government development agencies, MFIs, banks and donors who advise and work with rural populations and communities. By the end of the course the participants should be able to:
- Understand the special challenges of rural areas that are traditionally associated with rural and agricultural credit directed to the poor.
- Build a deeper understanding of the fundamental issues of rural finance.
- Have skills in conducting a rural and agricultural portfolio assessment and loan analysis – applying 5 C’s in rural finance.
- Be familiar with several innovative models and alternate ways of offering rural finance services.
- Gain skills in conducting seasonality analysis, preparing cash flows, assessing risk and appraising loans.
- Develop an understanding of new and innovative loan products and savings approaches for agriculture and rural areas.
- Gain awareness of sources and reference links to further information and support for addressing future challenges in the application of financial services in rural areas.
The material presented here has been developed by Calvin Miller of FAO, IDEAS (Institute for Development, Evaluation, Assistance and Solutions) and the Giordano dell'Amore Foundation in collaboration with the University of Bergamo in Italy. Each module contains facilitator's notes, a PowerPoint presentation, background reading and a case study for use in a class.