Maravi

World Bank to embark on expansion of rural finance

World Bank to embark on expansion of rural finance
Written by Nchima Nchito Jr
Friday, June 12, 2009 8:20:04 PM

LESS than one per cent of farmers in Zambia have access to credit from formal institutions, the World Bank has revealed. The Bank stated that it was in recognition of the financial crisis hitting the poorest in Africa and other parts of the world that it had embarked on a new venture to support the expansion of rural finance in the developing world

“Through a US $20 million Bill & Melinda Gates Foundation contribution, the World Bank will establish the Agriculture Finance Support Facility. In a time of tight credit, the facility will support grants to bank and non-bank institutions for activities to increase access to financial services, such as savings, credit, payments and insurance, in rural areas in developing countries as profitable business lines,” the bank stated.

And World Bank Rural Finance advisor Renate Kloeppinger-Todd stated that the facility would enable financial institutions to provide new opportunities for smallholder farmers to make productivity enhancing investments and use new technology and services.

Bill and Melinda Gates Foundation deputy director for Financial Services Carlos Cuevas stated that there was a great need among smallholder farmers, who made up the bulk of the world’s poor, for ways to save and manage their money.

“Having access to safe and reliable financial services such as savings, credit and insurance, allows poor farmers to safeguard cash, which they often receive only once a year during harvest. In this way, they can better provide for their families, prepare for emergencies, and build long term financial security,” stated Cuevas.

Even before the financial crisis, most of the over one billion smallholder farmers worldwide and many of the rural entrepreneurs of the developing world had little to no access to financial services. Since the financial crisis, access to these needed services has become even more strained.

Financial cooperatives and cooperative banks, a major source for financial services in rural areas in developed countries, have not emerged as significant service providers in most developing countries.

The World Bank provides ongoing support to many countries to improve the enabling environment for financial sector development. It also makes direct investments in rural finance. In fiscal year 2008, the World Bank committed $613 million for twenty-eight rural finance projects.

Labels: CARLOS CUEVAS, FARMERS, RURAL CREDIT FACILITY, World Bank

posted by MrK @ 7:24 PM