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The World Bank and Rural Finance

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.

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The World Bank and Rural Finance

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

  2. 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

  3. 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

  4. Past and ongoing World Bank programs • 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 ……continued

  5. 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

  6. Strategy for ECA Region for lending to agriculture • 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)

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