Building Women-Focused Finance

#bwffconf

Global Innovations to Promote Financial Inclusion: Rural Women Breakout Session

Angela R. Hansen, Partner

Director of Agriculture & Food Security Practice

Dalberg Global Development Advisors

#bwffconf@angelarhansen, @DalbergTweet

Building Women-Focused Finance

#bwffconf

NGOs & FOUNDATIONS

[+ other confidential

clients]

CORPORATIONS UNITED NATIONSGOVERNMENTS &

GOVERNMENT AGENCIESDEVELOPMENT

FINANCE INSTITUTIONS

Dalberg is a strategic advisory firm dedicated to helping clients solve the world’s toughest problems

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Building Women-Focused Finance

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Dalberg’s 2012 report raised awareness of the financing needs of smallholder farmers and motivated the creation of a new Initiative

• Initiative to build the essential R&D infrastructure and demonstrate progress in ‘pathways’ for smallholder finance

• A time-bound 3 year effort housed in the non-profit Global Development Incubator and guided by a Steering Committee of sponsor funders and key actors

• Three main phases of work focus on 1. Research and design (6-12 months)2. Pilot and implementation (18 months)3. Evaluation and policy (12 months)

• The goal of the Initiative is marked progress toward closing the gap between smallholder financing demand and supply

Building Women-Focused Finance

#bwffconfThe Initiative examines smallholders activity in a number of value chains; noting they can be classified into four typologies

Value Chain Typology

A) Exportable cash crop

B) Captive global buyer value chain

C) Organized local staple

D) Un-organized local staple

Aggregation Point

Producer organization (e.g., cooperatives or associations)

Contract or out-grower organization (e.g., processer or buyer)

Warehouses or local traders

No Aggregation

Value Chain Power

Supplier power (at producer organization)

Buyer power Light buyer power (or government regulated)

None (likely regulated by government)

% of farmers Less than 10% of farmers are in typology A or B* Vast majority are in typology C or DMarket Characteristics

• Export• No alternative market

• Export • Organized local market

• Limited formal markets

Crop Characteristics

• Price incentives for quality

• May be perishable post-harvest

• Durable post-harvest • No price incentive for quality

Examples Coffee, Cocoa Fruit & Vegetables, Cotton, Dairy

Tree nuts (in India), Maize (in Kenya)

Rice (in Nigeria)

Financing Models

Direct to producer orgs. (e.g., social or commercial lending)

Internal value chain financing (e.g., through buyer or processor)

Warehouse financing or local trader financing

Agriculture microfinance

* Estimated figure based on average ratio of agriculture export value to production value in select countries (FAO Stat)Note: The chart above does not include farmers that produce primarily for on-farm consumption (i.e., only includes traded crops)Source: Interviews with social lenders and technical assistance providers; FAO Stat; Dalberg analysis

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Replicate and scale existing social lending models

Innovate new social lending products beyond short-term trade finance

Finance out-grower schemes of multinational buyers

Finance through alternate aggregation points

Finance direct to farmers

The typologies map to five ‘growth pathways’ and pose interesting gender related questions

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A) Exportable cash crop

B) Captive global buyer value chain

C) Organized local staple

D) Un-organized local staple

Relevant Typology Growth PathwayGender Balance

Hypothesis

Building Women-Focused Finance

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For more information contact:

Angela R. Hansen, Partner

Director: Agriculture & Food Security

Dalberg - Global Development Advisors

25 Owl Street, 13th Floor, Johannesburg, South Africa 2092

Tel: +27 (0)11 482 7431 | Skype: angelarhansen | @angelarhansen

E: angela.hansen@dalberg.com | www.dalberg.com | @DalbergTweet

The 2012 Report “Catalyzing Smallholder Finance” is available for download on the Dalberg website.

Thank you!