Agriculture is the main source of income among the rural poor worldwide. Agricultural growth can decrease rural poverty rates quicker and more efficiently. One significant vehicle to attain growth in the industry is finance.

What is preventing farmers and agricultural businesses to obtain finance?

Geography is a major reason. The large geographical dispersion of clients and low population density in the countryside make it hard for banks to work at a profitable scale. The absence of financial institution outlets has translated into a limited provision of saving and credit products to agribusinesses and farmers.

A second factor preventing financial institutions has something to do with the general risk related to agricultural activities. When adverse weather conditions happen, they naturally affect a big number of firms and farmers instantaneously. This makes it more difficult for financial providers to expand their portfolio of clients. When one client fails to pay, many others will be in the same situation. The political motives or paternalistic behaviour that governments may have can aggravate this problem.