Agricultural lenders join forces
Seven international social lending institutions have announced the launch of the Council on Smallholder Agricultural Finance (CSAF), an industry council focused on creating a thriving, sustainable and transparent financial market to serve the financing needs of small and growing agricultural businesses in low- and middle-income countries worldwide.
The alliance of social lending institutions, also referred to as impact-first agricultural lenders, was formally launched at the 11th Skoll World Forum on Social Entrepreneurship in Oxford UK. The founding members of CSAF include Alterfin, Oikocredit, Rabobank’s Rabo Rural Fund, responsAbility Investments AG, Root Capital, the Shared Interest Society and Triodos Investment Management. New members who share CSAF’s objectives of facilitating financial inclusion, reaching and supporting the livelihoods of the world’s 450 million small-scale farmers and promoting responsible lending principles may be added in the future.
Serving the missing middle
Extending financial markets to serve agricultural businesses in the ‘missing middle’ between microfinance and commercial lending is of great importance. These businesses can play an important role in supporting environmentally sustainable economic activity that can feed farm communities and the growing population that depends upon them. Social lenders began addressing this underserved market in the 1990s, both to have an impact on the businesses they could reach directly and to demonstrate models that other financial institutions could replicate and scale.
The alliance will convene regularly to exchange learning, identify best practices and develop industry standards. In 2013, disbursements by the seven founding members of CSAF totalled an estimated $362 million. Though the unmet need for financing is vast, CSAF members aspire not only to grow their direct lending, but also to catalyze a thriving and sustainable financial market serving agricultural businesses. By 2016, CSAF members expect to collectively lend $500 million a year to agricultural businesses in the missing middle, demonstrating their bankability to local banks and other financial institutions.
Rabo Rural Fund