From research to practice: strengthening agricultural finance through National Development Banks
Rabo Partnerships (RP) and the International Fund for Agricultural Development (IFAD) are taking the next step in their Inclusive Financial Ecosystem for Food Systems Transformation (IFE-FST) programme. The initial phases of the programme focused on analysing global best practices, and translating these into concrete recommendations for National Development Banks (NDBs) in Latin America and Asia. Now, the programme is moving from research to implementation, with selected NDBs putting recommended financial and non-financial solutions into practice with support from RP. This article highlights the work underway in Bolivia, where RP and the Bolivian development bank (Banco de Desarrrolo Productivo, BDP) are focusing on optimising an existing credit guarantee and developing a Crop Suitability Index.
Last year, Rabo Partnerships and IFAD launched their collaboration under the IFE-FST programme to help address barriers to finance for small-scale farmers in Asia and Latin America. NDBs play an important role in this effort. Their development mandate puts them in a strong position to serve small-scale farmers and other client groups that may not be adequately reached by other financial institutions (FIs). Following the initial research and solution design work, the programme is now moving towards implementation of practical solutions tailored to selected NDBs.
Enabling the financial ecosystem through BDP
In Bolivia, Rabo Partnerships is working with BDP, the country's National Development Bank for the agricultural sector. BDP provides direct lending to farmers and agribusinesses as well as indirect lending and credit guarantees through commercial banks and financial cooperatives. It also provides technical assistance and knowledge sharing.
The ambition goes beyond strengthening BDP itself: the programme aims to contribute to a stronger financial ecosystem for agriculture in Bolivia. To help realise this broader ambition, Rabo Partnerships and BDP selected the optimisation of an existing credit guarantee as one of the solutions for the implementation phase. Rather than designing a new guarantee from scratch, RP and BDP are working together to improve an existing guarantee that is currently underutilised. Taking the market as a starting point, we visited various financial institutions (FIs) in the country together with BDP to understand what is needed to increase the attractiveness and effectiveness of the existing guarantee product. These discussions showed that the guarantee process needs to be more standardised and efficient; and that combining the guarantee with additional services could make it more attractive to participating financial institutions.
This is where the second solution comes in: together, we have developed a prototype of a Crop Suitability Index (CSI). The tool brings together data on climate, soil, terrain and water stress and compares local conditions with the cultivation requirements of specific crops. The resulting maps can help identify which locations offer suitable conditions for particular crops.
This information can support BDP’s financing decisions as well as its technical assistance offering for farmers. Additionally, the tool can be offered to other FIs in the country as a bundled service with the credit guarantee. For farmers, the combination could ultimately mean better access to appropriate financing alongside information that helps them assess which crops are best suited to local growing conditions.
- Joris Timmers
Program Director at Rabo Partnerships
Beyond recommendations and prototypes
Building on these insights, RP is now supporting BDP in improving the guarantee’s application and payout process.
For the CSI, the first prototype has now been developed and delivered to BDP. The next steps are to further improve the tool through field validation and feedback from farmers, and integrate it into BDP’s internal credit processes.
In parallel, the tool will be introduced to other FIs in Bolivia as part of the re-launch of the improved credit guarantee mechanism.
These practical steps illustrate what the IFE-FST programme is designed to achieve: not simply developing new financial solutions, but helping NDBs put them into practice and strengthen the ecosystems that serve small-scale farmers.
Bolivia is one example of how the collaboration between RP and IFAD is moving from research and solution design to implementation. The experience with BDP will also generate lessons that can be shared with NDBs in other markets, helping successful approaches travel beyond the participating countries.
