Access to finance is a significant barrier for small farms and business in the developing world.
Smallholders often lack funds to invest in farm inputs to improve productivity, while many entrepreneurs lack the capital to invest in equipment and infrastructure. At the same time, these farmers and entrepreneurs face huge obstacles in accessing the working capital loans, long-term credit, and other financing that would enable them to meet their needs.
Despite the massive demand, there are few providers of financial products and services that cater to such clients, partly due to a perception that they are too risky and costly to serve.
Bridging this financing gap requires a collaborative and multifaceted approach. TechnoServe works in several capacities with a wide range of partners to increase capital flow and foster more inclusive finance in the communities where we work.
Our Expertise
TechnoServe works with smallholder farmers, farmer organizations, cooperatives, and a variety of small and growing businesses (SGBs) to increase access to finance. We help them assess, forecast and communicate their financing needs to potential lenders and investors. We also support the capitalization of larger agribusinesses and develop finance solutions for entire industries in developing economies.
In parallel, TechnoServe provides advisory services to financial institutions in order to help them efficiently deploy capital and deliver new and scalable financial services. We work with commercial banks, investment funds, development finance institutions, and multinational corporations to determine the financial health and viability of potential clients and help structure investments to meet their needs.
By offering the following integrated financial advisory services and training, TechnoServe seeks to increase efficient capital flows, promote financial inclusion, improve transparency among market actors and drive overall economic growth.
- Strategic and Financial Analysis: TechnoServe works with smallholder farmers and SGBs to build their technical capacity. We also partner with financial institutions to support their expansion into the agricultural sector, and we provide independent insight and market analysis to industry stakeholders.
- Capital Mobilization: Acting as an independent intermediary, TechnoServe builds linkages between capital providers and those seeking capital. We help our smallholder farmer and SGB clients at all stages of the origination and transaction process.
- Risk Management: To support loan monitoring and ensure repayment of invested capital, TechnoServe designs specialized risk-management solutions that incentivize and maintain transparency between clients and lenders.
What We Do
By offering the following integrated financial advisory services and training, TechnoServe seeks to increase efficient capital flows, promote financial inclusion, improve transparency among market actors and drive overall economic growth.
Strategic and Financial Analysis
TechnoServe works with smallholder farmers and SGBs to build their technical capacity. We also partner with financial institutions to support their expansion into the agricultural sector, and we provide independent insight and market analysis to industry stakeholders.
TechnoServe assists smallholder farmers and entrepreneurs by building their technical capacity in areas such as business planning, process improvement, and financial analysis and modeling. We help them calculate their immediate cash flow requirements and long-term financial needs and aid them in understanding and preparing to access available products and services.
TechnoServe also partners with financial institutions to more accurately assess agricultural risk. We work with these institutions to design innovative financial products and investment approaches that are cost-effective, scalable and tailored to the unique needs of smallholder farmers and SGBs.
Additionally, recognizing the market inefficiencies and unreliable market information in the countries in which we work, we provide independent insight and market analysis to promote and facilitate sustainable trade and investment. This includes identifying and evaluating risks and opportunities within specific value chains, developing industry outlooks and supporting due diligence gathering for new investment or market entry activities.
Learn more:
- Our Guide to Working with Informal Financial Institutions offers best practices for expanding financial inclusion for rural smallholders through informal financial institutions, such as savings and credit cooperatives (SACCOs), rotating savings and credit associations (ROSCAs) and others.
- Juan Carlos Thomas, country director for TechnoServe Chile, examines the demand side of financing, and how TechnoServe works with entrepreneurs to help them qualify for credit, find creative ways to stretch available capital and build thriving small businesses.
Capital Mobilization
Acting as an independent intermediary, TechnoServe builds linkages between capital providers and those seeking capital. We help our smallholder farmer and SGB clients at all stages of the origination and transaction process.
Our support includes preparing a cooperative or an SGB to apply for a loan, or helping an investor conduct due diligence, structure the terms of an equity investment and provide pre-investment technical assistance.
To address the lack of collateral and high cost of capital for our clients, we identify sources and raise funds to develop risk-sharing mechanisms, such as loan guarantees and matching funds programs. For financial institutions, these support services can lower transaction costs and increase efficiency and scale, while also unlocking much-needed capital for smallholder farmers and SGBs.
Learn more:
- In Haiti, we partnered with a local financial institution to unlock $2.3 million in loans for more than 8,000 mango farmers.
- We facilitated a breakthrough $10 million risk-sharing facility between the IFC and Ethiopia’s Nib International Bank, benefitting 47,000 smallholder farmers.
Risk Management
To support loan monitoring and ensure repayment of invested capital, TechnoServe designs specialized risk-management solutions that incentivize and maintain transparency between clients and lenders.
For instance, we build mobile-based management systems that allow banks to remotely monitor client inventories and track cash flows. We also work with financial institutions to develop custom products to reduce market uncertainty, such as crop insurance and price risk management tools.
Additionally, TechnoServe’s trainings on financial literacy, accounting, and business management are incorporated into all advisory services offered and are designed to reduce the risk profile of clients and help them put their capital to work most effectively.
We also work on behalf of financial institutions and donors to design, implement and manage large-scale technical assistance funds that provide or facilitate support to their portfolio companies of investment funds. Such support includes identifying technical assistance needs of portfolio companies and their smallholder suppliers, developing recommendations for support, identifying and contracting providers to deliver services, managing the delivery of technical assistance and monitoring and evaluating outcomes.
Learn more:
- We are managing a pan-African Technical Assistance Facility to support investments made by the African Agricultural Fund.
Partner With Us
There is still much work to be done. The number of farmers and businesses we have reached remains a small percentage of the world’s financially excluded.
For improvements to take hold at scale, investments are needed to develop a systematized way to train more farmers in financial literacy, build the capacity of enterprises and expand the agricultural reach of financial institutions.
Contact us at a2f@technoserve.org to learn more about partnering with TechnoServe to increase financial inclusion.
