The World Bank and Rural Finance Main Messages of the 2008 WDR on Agriculture Renate Kloeppinger-Todd Rural Finance Advisor The World Bank.

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Presentation transcript:

The World Bank and Rural Finance Main Messages of the 2008 WDR on Agriculture Renate Kloeppinger-Todd Rural Finance Advisor The World Bank

Main Messages of the 2008 WDR on Agriculture The lack of financial services in rural areas is a major obstacle to the growth of profitable agriculture and related activities Building on innovations of local institutions in developing countries, rural financial services can be provided to smallholder farmers There is a need for non-financial support measures in order to finance agriculture Financial services can be effective tools for poverty reduction in rural areas

What does the WDR propose to increase financing for agriculture? Financial leasing for investment finance Establish credit reporting bureaus Explore and pilot-test technological innovations Support to institution-building and proper product development Working through supply chains Working with public and recently- privatized agriculture development banks

Support to “good” policies and an enabling environment Interest rate policies Laws on land and other property rights Establishment of registries Development of risk management instruments Index-based weather insurance Hedging instruments for commodity price risks Past and ongoing World Bank programs ……continued

Determination and dissemination of good practices for different delivery channels Leasing Financial cooperatives Community-based organizations Commercial banks and agricultural banks New initiative on Financing for Agriculture Credit risk management Use of innovations Collaterized lending Commodity exchanges Past and ongoing World Bank programs ….continued

Support on the policy level Macro-economic policy Enabling environment Laws and regulations on various issues (leasing, collateral laws, capital market development, etc.) New product development and risk management strategies Collateral strategies such as warehouse receipts, factoring Partial risk-sharing mechanisms such as guarantee funds Insurance (index-based agricultural, life, health Commodity exchanges, publication of commodity pricing Development of agricultural lending skills in financial institutions Comprehensive approach (extension, access to markets) Strategy for ECA Region for lending to agriculture