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Aceli Reports

Learning Brief: The Effect of Central Bank Policies on Lending to Agricultural SMEs in East Africa

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Learning Brief

Draws upon our review of the literature, conversations with more than 70 practitioners in East Africa, and the experiences of our team from the perspective of both lending and borrowing.

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There are many well-documented barriers to agri-SME finance: risk aversion on the part of lenders, lack of collateral on the part of SMEs, and weak infrastructure, among many others.

The Aceli team has recently delved into a set of barriers that is not commonly discussed: Central Bank regulations. These highly technical policies and the ways in which regulated financial institutions interpret them are key drivers of the agricultural credit gap.