Smallholder farmers are the fundament of our food system. In most regions, they provide for over 70 percent of the food that is being consumed. And like any other entrepreneur, they need access to finance to grow their business. But while the global community heavily relies on them to ensure future food security for a growing population, investors are reluctant to provide the necessary investments. With the Sustainable Agricultural Finance Expansion Programme, Hivos, Enclude and Triodos Investment Management aimed to enhance access to finance for these smallholder farmers by supporting a selected number of Micro Finance Institutions (MFIs).
This publication marks the end of this three-year programme and presents the lessons learned using in-depth descriptions of six case studies of MFIs from various continents. The programme proved to be highly effective in strengthening the capacity of the selected MFIs to offer agricultural finance to smallholders. Moreover, market opportunities and environmental threats were key drivers to greening finance systems for those MFIs interested in the programme and – in most cases – working on institutional and financial sustainability issues was necessary for the green financial products to become viable.
The study also showed that many MFIs are not yet aware of the relevance of green (agricultural) finance or do not know how to integrate this into their core business. This growing insight encouraged Hivos and Enclude to develop the Green Performance Agenda, an interactive digital toolkit that helps MFIs to become aware of the relevance of environmental sustainability and to formulate a green agenda for their business.
The Sustainable Agricultural Finance Expansion Programme shows what it takes to deal with both smallholder inclusion and environmental sustainability. But it also shows that there is still a long way to go for the MFI sector to truly become a key player in shaping our future food system.
Hivos and Enclude are committed to continuing our work towards the further greening of the sector by building on the experiences of both the awareness raising potential of the Green Performance Agenda tool and the green financial product development component of the Sustainable Agricultural Finance Expansion Programme.
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