Rural outreach Details

The paper begins with a description of the participants in the survey, showing that more than half came from the private financial sector and donors, and that their main interest was in learning about current innovations and trends in rural finance, with a distinct interest in risk management, perhaps understandable given the origins of the participants in the supply side of rural finance. A second section will be of primary interest to organisers of future conferences, as it analyses the success of the present conference. 80% of those surveyed rated the conference a success, ie, 4.0 or higher on a scale of 1 to 5. The author dryly observes that “holding this conference once every three decades may not provide enough communication with key individuals.” She suggests a similar conference probably ought to be held annually or bi-annually. Respondents were excited by the communications possibilities opened up by the conference website. Critiques of the conference included a list of missing topics, which would be a good springboard for creating an agenda for a follow-up conference: these include agriculture-related issues, governance issues in financial institutions, and donor and private bank issues, specifically how to encourage such banks to provide rural lending.

Perhaps most useful is Section 3, “Barriers to Successful Rural Finance”, which provides an analysis of the state of rural finance as of 2003, with six different areas highlighted as barriers to rural finance: an incomplete understanding of the financial sector of the rural economy, its dynamics, risks, and needs; misaligned policy design; problems with government and donor interventions; weak agribusiness due to poor rural infrastructure and missing market linkages; an unsupportive legal and regulatory framework; and the problem of banks considering rural finance to be too expensive and too risky. The author concludes that the agribusiness sector does not appear to be incorporated into formal financial systems, and thus a large portion of rural financial activities occurs unofficially, through non-transparent systems such as supplier and trade financing. If this sort of activity were included in a lending profile of the rural sector, the author asserts that a drop in risk levels would be observed, which would then encourage formal financial institutions to get involved in rural finance. She also suggests that further research, in the areas of field analysis, pilot testing, and information sharing, will lead to more practical and more successful policy and product proposals. Such research, though time-consuming, would function as an error-checking mechanism aiding the ultimate success of projects. Keeping up to date on current trends in rural finance, and performing post-project evaluations, will help improve the success of projects, while making sure that rural finance is kept as a separate independent entity, different from finance in an urban setting, will make financial service providers more responsive to the trends and needs of the sector. This paper is brief but coherent, and provides an interesting summary of current ideas in rural finance.

• synthesis paper (EN)