IFC’s Global Agri-Finance Advisory Program aims to help increase the availability of agricultural finance in emerging and developing markets by promoting appropriate risk-mitigation products and skills development in financial institutions.
Agriculture provides livelihoods to many people in developing and emerging economies — especially those living in rural areas. Yet access to agricultural finance is often a hurdle. Lack of access to finance stops many farmers from adopting new technology and improving their efficiency.
With demand for food expected to increase by 60 percent by 2050, and the agricultural system already under pressure to satisfy current demand, the only way to increase food production is to invest in sustainable technologies and climate-smart agriculture. These kinds of investments would enable farmers to produce more food with less of an environmental impact. Wise investments could also help keep food prices lower and promote economic health in rural areas.
Yet financing the agricultural sector presents many challenges for financial institutions. Reaching remote rural areas can be expensive. Weather risks, crop concentration, and price volatility increase the credit risk for lenders, reducing their appetite to finance the sector. Risk-assessment technologies often lack precision for evaluating investment opportunities in rural areas. Financing the agricultural sector requires integral risk-management strategies and close collaboration with tech providers and agribusinesses.
How it Works
Our program supports different types of institutions — banks, microfinance institutions, and fintechs — as follows:
- We work with banks to help strengthen agricultural supply chain finance, climate finance for agribusinesses, risk-assessment models, and digital scoring for agriculture.
- We help microfinance institutions with developing digital scoring models, E-wallet, and mobile payments; with building the skills of credit agents in rural areas, and with building strategic alliances with agribusinesses.
- We assist fintechs with developing digital scoring models, implementing risk-management frameworks, improving portfolio management in rural areas, and building strategic alliances in agricultural supply chains.
Through partnering financial institutions, IFC helps to provide customized short- and medium-term working capital and long-term agricultural financing. Our investments include credit lines and risk participation. We often compliment these investments with advisory services.
Our key agricultural finance programs include the Global Trade Liquidity Program (GTLP), the Food and Agri and Global Warehouse Finance Program (GWFP), the Critical Commodities Finance Program, and the Food System Development Program (FSDP).
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