Better Practices in Agricultural Lending

Publication Date: 1999
Published by: GTZ - Deutsche Gesellschaft für Technische Zusammenarbeit GmbH
Document Type: Paper

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What can turn around the failures of rural financial institutions in delivering agricultural credit?

Explores how new microfinance technologies in urban areas of developing countries can provide useful models for similar operations in rural areas for agricultural production lending

Outlines components relevant to the successful provision of agricultural finance in developing countries. Looks at the problems of high risks and costs involved in agricultural finance. Outlines some improved practices that emerge from recent financial market developments

cultural sector and the rural economy that present challenges for expanding the frontier of formal finance, how these affect the provision of sustainable financial services, and the key elements of a strategy for successful agricultural lending

Argues that sustainable provision of credit and general financial services to farmers and rural inhabitants in developing countries has proved to be a difficult task, littered with failures, and has lead to a decline in agricultural credit supply for borrowers, in spite of increased demand

Concludes that although no simple blueprint exists for successful rural financial institutions serving agriculture, some recent interesting experiences derived from case studies and new microfinance developments suggest "better practices".

[Adapted from author]