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Rural finance

Financial inclusion for the world’s rural poor

The vast majority of rural people do not have reliable, secure ways to save money, protect and build assets, or transfer funds. This is particularly true for vulnerable groups, such as women, youth, and displaced people.

Basic formal financial services still reach only 10 per cent of rural communities. Weak infrastructure, the limited capacity of financial service providers, and low levels of client education all contribute to this complex problem.

An engine of rural transformation

IFAD recognizes the vast potential of rural finance to improve the livelihoods of rural people.

Over the past 30 years, the development of financial systems has had an enormous impact on rural livelihoods. Ground-breaking institutions and new instruments have allowed financial services to grow and broaden their reach.

Technology has allowed clients in remote communities to access a wider range of financial products.

IFAD has worked on rural finance systems in more than 70 countries for over four decades, and has invested over US$3 billion in rural finance systems.

But there is still much to be done. In a changing global economy, amidst financial crises, volatile food and agricultural commodity prices, and the perils of climate change, inclusive rural finance remains a crucial element in rural transformation.

Managing risks and leveraging investments

There are many risks affecting smallholder farmers that discourage the private sector from investing.

Financial institutions often perceive small-scale agriculture as being too risky and are reluctant to lend money to farmers and agribusinesses. Farmers themselves are reluctant to borrow for agricultural production because of their difficulty in managing risks such as climate-related shocks and livestock disease.

Over the past ten years, IFAD has become a leader in the field of agricultural risk management (ARM). The Fund promotes a holistic approach to protect and strengthen rural economies and food production systems, at the same time as leveraging rural financing and investment in smallholder farmers.

As part of the holistic approach to ARM, insurance is a valuable financial tool for unavoidable risks that cannot be managed in other ways.

IFAD hosts the Platform for Agricultural Risk Management (PARM), a G20 initiative that brings a comprehensive risk management approach and process, where risks in agriculture are assessed, prioritized and tackled in a structured way.

PARM provides technical support to developing country governments to support them in moving away from a culture of coping with disasters towards a smart management of risk.

PARM is also home to two technical assistance initiatives focused on agricultural and climate risk insurance that support IFAD’s portfolio: INSURED (Insurance for Rural Resilience and Economic Development) and Managing Risks for Rural Development: Promoting Microinsurance Innovations (MRRD).

The power of microfinance and remittances

IFAD-supported projects increase access to financial services and loans, so that small-scale producers can invest in their businesses and increase their productivity.

As one of the leading microfinance funders worldwide, IFAD's ongoing investments in rural finance at 31 December 2017 was around US$1.14 billion. Approximately 13 per cent of our ongoing investment portfolio is dedicated to rural finance.

Remittances are a powerful instrument for fostering financial inclusion and livelihood development in rural communities. Our multi-donor Financing Facility for Remittances (FFR) aims to maximize the impact of remittances on development, and promotes migrants’ engagement in their countries of origin.

In depth

In depth

Insurance

Smallholder farmers and poor rural households are extremely vulnerable to local and global shocks. Agriculture is their main source of food and income, and this is the sector hardest hit by the climate breakdown. 

Remittances and migration

For over a century, people have been moving from rural to urban areas, and across national borders in search of better opportunities. Of the 250 million international migrants, approximately 200 million leave home to work and send remittances home to their families.

Spotlight

Spotlight

What are Public Development Banks? Your questions answered

Public Development Banks are a crucial but often underappreciated force driving global change for the better. As the world confronts compounding crises, we deep dive into PDBs and why they matter for rural people.

Projects

Projects

Benin

Adapted Rural Financing Services Promotion Project

Bangladesh

Promoting Agricultural Commercialization and Enterprises Project

Armenia

Infrastructure and Rural Finance Support Programme

Experts

Publicador de Conteúdo

James Marc de Sousa-Shields

Lead Regional Technical Specialist, Rural Finance, Markets and Value Chains

[email protected]

Lorna Grace

Lead Regional Technical Specialist, Rural Finance, Markets and Value Chains

[email protected]

Sauli Hurri

Senior Regional Technical Specialist, Rural Finance, Markets and Value Chains

[email protected]

Nadhem Mtimet

Senior Regional Technical Specialist, Rural Finance, Markets and Value Chains

[email protected]

Stories and news

Stories and news

What are Public Development Banks? Your questions answered

Setembro 2023 - STORY
Public Development Banks are a crucial but often underappreciated force driving global change for the better. As the world confronts compounding crises, we deep dive into PDBs and why they matter for rural people.

Investing in a better future: East and Southern Africa

Setembro 2023 - BLOG
East and Southern Africa is home to a diversity of landscapes, people and challenges. We sat down with Regional Director Sara Mbago-Bhunu to talk about rural life and the importance of investment.

The UN’s agricultural development fund chief urges Public Development Banks to direct funding to fight hunger, poverty and climate change

Setembro 2023 - NEWS
“Public development banks must ensure that their significant financial resources better serve the fight against hunger, poverty and climate change”, said Alvaro Lario, President of IFAD, at the Finance in Common Summit 2023 (FICS) today in Colombia.

IFAD, Stanbic Bank enter partnership to cut money transfer costs to Uganda in half

Setembro 2023 - NEWS
IFAD and Stanbic Bank Uganda (SBU) today announced a partnership that will cut the cost incurred by Ugandan migrant workers sending money home in half by using Flexipay, a digital payments’ platform.

Related publications

Related publications

INSURED Indonesia Country Update: Making climate risk insurance available to small-scale producers

Setembro 2023
IFAD’s INSURED programme has been working with partners in Indonesia to improve the availability of climate risk insurance that enables farmers to strengthen their resilience.

INSURED - Insurance for rural resilience and economic development

Junho 2023
INSURED is a technical assistance programme working to strengthen agricultural insurance in IFAD’s portfolio.

SAFIN Annual Progress Report 2022

Junho 2023
Rapid inflation in 2022 exacerbated the financing challenges faced by enterprises in the midstream of agricultural value chains.

Related documents

Related documents

Inclusive rural finance policy

Dezembro 2021 - CORPORATE
policy   policies_and_strategies  
This publication constitutes the new IFAD Inclusive Rural Finance policy, which supersedes the 2009 RFP.  

IFAD Policy on improving access to land and tenure security

Dezembro 2008 - CORPORATE
policy   policies_and_strategies  
Secure access to productive land is critical to the millions of poor people living in rural areas and depending on agriculture, livestock or forests for their livelihood. It reduces their vulnerability to hunger and poverty; influences their capacity to invest in their productive activities and in the sustainable management of their resources; enhances their prospects for better livelihoods; and helps them develop more equitable relations with the rest of their society, thus contributing to justice, peace and sustainable development.