Rural finance – The key to development in rural regions

The overwhelming majority of the world's poor live in rural regions.  The economic development of such regions is one of the keys to reducing global poverty.  One of the main criteria in this regard are financial services that take account of the needs of farmers and small agricultural businesses as well as non-agricultural occupations such as traders and manufacturers.

The SDC's focus

The SDC promotes innovative approaches and projects for the development of an inclusive rural finance system that supports both agricultural and non-agricultural activities with appropriate financial services, such as savings, credit, payment transactions and insurance.  The SDC capitalises on synergies with other rural development measures which promote quality, productivity and the marketing of agricultural products, for example.  The main focus is on:

  • Support for economically viable, client-centric financial institutions and structures in rural regions, including savings and credit unions or co-operatives, alliances between informal and formal financial institutions, full-service banks with a presence in rural areas, or new types of rural development banks, etc.
  • Promotion of education and training in finance at all levels – customers, employers, management as well as control and supervisory bodies of financial institutions
  • Promotion of innovation, such as new financial products and services, for farmers as well as agricultural and non-agricultural businesses
  • Promotion of favourable political and legal frameworks

Background

Despite the important economic role played by rural regions, they generally suffer from a distinct lack of financial services.  Financial services for farmers, agricultural and non-agricultural businesses are either non-existent or inadequate and very expensive.

Rural and urban regions need different financial services. In rural areas, credit requirements are of a medium to long-term nature; loans carry more risk for financial institutions and frequently entail significantly higher transaction costs. 

Current challenges

The development of rural financial systems entails a range of specific challenges.  These include low population density and low economic activity, high transaction costs due to deficient infrastructures (roads, telecommunications) or insufficient population and land tenure records, a lack of qualified personnel in financial institutions as a result of the low education level, specific agricultural risks, such as fluctuating precipitation, pest outbreaks and disease, and price fluctuations.

Current projects

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Supporting livestock traceability in the South Caucasus

The image shows a close-up of a calf with an identification tag in its right ear.

15.06.2016 - 31.12.2021

Identifying where animals have come from and recording information about their health is essential in modern agriculture to prevent the spread of diseases and stop products from diseased animals reaching the market. A system to ensure traceability will help to improve the incomes of farmers in the South Caucasus by increasing both herd productivity and the producers’ access to markets.

Country/region Topic Period Budget
South Caucasus
Agriculture & food security
Agriculture value-chain development (til 2016)

15.06.2016 - 31.12.2021


CHF 5'935'000



Appui aux économies locales des collectivités de Youwarou et de Niafunké. Programme de Soutien aux Economies Locales du Delta intérieur du Niger

01.07.2015 - 31.12.2020

Dans les régions du delta intérieur du Niger, au centre et au Nord du Mali, les populations rurales sont confrontées à des crises structurelles multiformes dont l’insécurité alimentaire. La DDC appuie les autorités locales avec des projets économiques dans les filières agricoles porteuses pour assurer la sécurité alimentaire et réduire la pauvreté d’au moins 150'000 personnes. En plus, elle accompagne les municipalités de cette zone dans la maitrise d’ouvrage du développement territorial et la gestion pacifique des ressources naturelles.

Country/region Topic Period Budget
Mali
Agriculture & food security
Governance
Climate change and environment
Rule of Law - Democracy - Human rights
Agriculture value-chain development (til 2016)
Decentralisation
Environmental policy

01.07.2015 - 31.12.2020


CHF 9'445'000



Livestock Development in the South of Armenia

Armenian Farmer with his calf

01.09.2014 - 31.08.2020

In the provinces of Syunik and Vayots Dzor in southern Armenia, the agricultural sector mostly comprises subsistence farming where farmers are barely able to support their households. This project aims to help farmers increase their milk and meat production, and thus their incomes, by supporting local veterinary services (to improve animal health), facilitating access to milk and meat markets, and promoting the sharing of know-how among farmers.

Country/region Topic Period Budget
Armenia
Agriculture & food security
Employment & economic development
Agriculture value-chain development (til 2016)
SME development
Agricultural development

01.09.2014 - 31.08.2020


CHF 10'000'000



Core Contribution to icipe (International Centre of Insect Physiology and Ecology)

01.01.2017 - 31.12.2020

icipe is a pan-African organisation for the development of arthropod pests to help ensure food and nutritional security and better health for people and livestock. SDC considers icipe’s work crucial for Africa’s development because icipe delivers world-quality science, contributes to regional and national food and health policies and produces biological products that help farmers to get better crop harvests. SDC supports icipe’s research for development efforts with a core contribution for the successful implementation of its strategic plan until 2020.


Programme d’appui à la valorisation des produits forestiers non ligneux, phase 2 (PFNL2)

15.12.2016 - 31.12.2020

Au Burkina Faso, les produits forestiers non ligneux[1] (PFNL) constituent une importante source alimentaire pour les populations des zones affectées par les chocs climatiques et déficitaires sur le plan alimentaire. Les PFNL font partie de l’alimentation de plus de 43,4% des ménages ruraux et procurent de l’emploi et des revenus. Le programme  contribue à l’accroissement de la sécurité alimentaire, nutritionnelle et des revenus des ménages ruraux et périurbains[2] par la valorisation et la gestion durable des PFNL.



[1] Les PFNL s’entendent par « tout bien d’origine biologique autre que le bois et la faune à l’exception des insectes, dérivé des forêts et des arbres hors forêts, constitués de végétaux spontanés, domestiqués, et ceux destinés au reboisement ». (Source FAO)

[2] Le périurbain est un espace rural au sens où l’essentiel des sols est attribué à des activités agricoles; mais c’est aussi un espace urbain au sens où la majorité de la population active qui y habite travaille dans une ville, en effectuant des migrations alternantes. Le milieu périurbain connait une très forte compétition entre usage agricole et non agricole des ressources: terres, main-d'œuvre, etc. La production agricole est orientée principalement pour le marché du centre urbain.

 


Programme d’appui à la commercialisation du bétail en Afrique de l’Ouest (PACBAO)

01.07.2016 - 31.12.2021

L’élevage et les marchés des produits animaux contribuent à l’intégration régionale et à la sécurité alimentaire en Afrique de l’Ouest. La Suisse soutient la Communauté Economique des Etats de l’Afrique de l’Ouest (CEDEAO) et le secteur privé de la région afin de fluidifier les échanges des produits animaux entre les 15 Etats plus le Tchad. La finalité est d’accroitre le revenu des éleveurs, développer des emplois surtout pour les femmes et les jeunes et favoriser une transhumance apaisée dans la région.


Global Forum for Rural Advisory Services (GFRAS)

01.06.2016 - 31.12.2020

Agriculture and Rural Advisory Services (RAS) are an important production input for millions of small farmers around the world. The Global Forum for Rural Advisory Services (GFRAS) is a global network of 16 continental and regional RAS federations currently covering around 130 countries. With SDC’s contribution, GFRAS supports these federations to develop better and more effective RAS at the benefit of millions of smallholders, many of them living in poverty.


Decentralized Rural Infrastructure and Livelihood Project (DRILP) – Phase III

01.01.2016 - 31.07.2021

DRILP Phase 3 will support the Government of Nepal to accelerate recovery and reconstruction following the devastating earthquake of 25 April 2015 and the major aftershock of 12 May 2015. The project will provide the Technical Assistance (TA) to implement the Asian Development Bank (ADB) financed Earthquake Emergency Assistance Project in rebuilding 450 kms of damaged roads in 12 districts[1] of Nepal and rehabilitate 200 kms of trails in two[2] districts.

[1] The 12 earthquake affected project districts are Solukhumbu, Okhaldhunga, Ramechhap, Dolakha, Kavre, Sindhuli, Kathmandu, Lalitpur, Bhaktapur, Lamjung, Gorkha and Chitwan

[2] Dolakha and Gorkha


Access Agriculture: Videos for Farmers

01.12.2015 - 31.12.2020

Access Agriculture is a global web platform aiming at providing easy access to agricultural learning and training videos of quality. Over 250 quality training videos will be available and translated into more than 60 local languages. These videos are targeted at small-scale farmers in developing countries as well as research staff, service providers, private and public extension services, farmer organisations and rural tv stations. They enable learning from farmer to farmer to support sustainable agriculture.


Programme d’Appui au Secteur du Développement Rural (Wusua Dabu) - PASDeR

01.07.2015 - 30.06.2020

Au Bénin en général, environ 11% des ménages sont en situation d’insécurité alimentaire et 38% vivent en-dessous du seuil de pauvreté. L’agriculture constitue la principale source d’emploi et de revenu. Le présent programme contribue à l’accroissement durable de la productivité des exploitations familiales paysannes agricoles et pastorales des départements du Borgou et de l’Alibori par la promotion des filières agroalimentaires (mais, riz, lait, viande).


AFR55, EcoWap, Phase 2

01.04.2015 - 30.09.2020

La politique agricole de l’Afrique de l’ouest vise la sécurité alimentaire en mettant un accent particulier sur la modernisation des exploitations familiales et au développement des filières agricoles. Pour défendre les intérêts des petits producteurs, les organisations paysannes faîtières jouent un rôle important dans la mise en œuvre de la politique agricole régionale. La DDC appui les trois principales organisations faîtières de la région à travers des contributions.


Contribution to the Pan African Bean Research Alliance PABRA

01.01.2015 - 31.12.2020

The greatest global challenge today is how to ensure food and nutrition security of a rapidly growing human population, considering climate change and without adversely affecting the natural base upon which the production is dependent. Beans, as the most important consumed grain legume, are a very good source of vitamins, minerals, and plant derived micronutrients. Significant yield increase of more than 60% are possible, following access to and use of improved varieties coupled with integrated crop management practices.

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