Pathways to Prosperity: 2019 Rural & Agricultural Finance State of the Sector report

Published 08 May 2020

The Swiss Agency for Development and Cooperation (SDC) profiles Aceli approach to incentivizing lending to agricultural small and medium enterprises in East Africa, key insights and results to date, and opportunities for the model to be applied to other markets.

Read the SDC case study here.


ISF Advisors and CASA Programme published a new State of the Sector report that sizes the demand for agri-SME financing in sub-Saharan Africa and Southeast Asia at USD 160 billion. They estimate that only USD 54 billion (~34%) is currently being met through formal finance channels—leaving an annual financing gap of USD 106 billion.

Going beyond these headline numbers, the report introduces a more specific view of where the market for agri-SME finance is and isn’t functioning. The research breaks down the market in a more comprehensive and holistic way to show where finance is specifically flowing, via specific types of products from specific types of funders to specific types of agri-SMEs. The report also presents four long-term change priorities to help systematically close the USD 106 billion agri-SME financing gap.

Read the report.

Convergence is the global network for blended finance – generating data, intelligence, and deal flow to increase private sector investment in developing countries.

Convergence supported the design of Aceli Africa through a grant that helped finalize the development of our financial incentives criteria, as well as our data and research partnerships.

In this case study, Convergence calls out insights from the design of our facility that could be useful for other practitioners designing blended finance initiatives – particularly in the agri-SME sector. Those insights include:

  • Data collection is a powerful tool for right-sizing concessional capital when designing blended finance interventions, particularly in nascent markets
  • Blended finance practitioners must balance tailoring custom-fit solutions with reducing complexity
  • Technical assistance can be useful for addressing both demand- and supply-side constraints
  • Blended finance can be used to support the development of local markets

Read the full case study here.

Aceli Africa collaborated with ISF Advisors to build on previous analysis of the natural stages of agricultural finance and interrogate more deeply the transition that countries make from government-led to more bank-led agricultural finance.

This new briefing note adds the historical experiences of Mexico, Turkey, and Uganda (as well as other specific initiatives in other countries around the world) to past research by ISF Advisors into the United States, Germany, and South Korea, to gain a greater understanding into the unique approaches that different countries have taken to make this transition.

While these approaches are heavily influenced by each country’s macro-level approach to managing the economy, analysis shows the importance of meso-level enablers and more direct micro-level interventions. As we unpack government actions into these different levels and acknowledge the dynamic interplay between the agricultural and finance sides of the market we create a more systemic view of these historical experiences.

Read the Role of Government in Rural and Agri-Finance briefing note and case study compendium.

In this COVID-19 Emergency Briefing Series, ISF Advisors and the Mastercard Foundation Rural & Agricultural Finance Learning Lab looks at how the COVID-19 crisis is likely to affect different types of rural households in emerging markets and what the cascading effects may be on markets, food security, and national security.

The series builds on the 2019 Pathways to Prosperity report and provides tangible recommendations to critical decision makers on how rural agricultural livelihoods can be supported. This brief looks at how the COVID-19 crisis will impact small and medium agricultural enterprises (agri-SMEs) in emerging markets that, in many value chains, are squeezed between a drastic decline in consumer demand and difficult operating conditions along the supply chain.

Read the full COVID-19 brief.

The last three years have seen a rapid acceleration in technology-driven innovation, which has powered changes in existing rural finance models, enabled providers to develop new service delivery models, and facilitated the bundling of services in new ways. We have also seen a more diverse influx of service and capital providers, which has reshaped the market.

But despite this progress, there remains a large, persistent gap in smallholder and agricultural SME finance. 

The Pathways to Prosperity report from ISF Advisors and the Mastercard Foundation Rural & Agricultural Finance Learning Lab presents new, dynamic frameworks for accelerating progress towards closing the $170 billion smallholder financing gap and achieving inclusive rural transformation.

Explore the research and download the report here.