To improve production and market access, growers need access to specialized financing for both operational and investment expenses. By working to reduce the risks and transaction costs associated with rural lending, CNFA eases barriers to entry, supports market diversity, promotes innovation and facilitates feedback to policymakers.
Reducing Risk & Opening Markets
To ensure appropriate financial products are available to the enterprises that need them, CNFA works with lenders and relevant stakeholders to establish the right environment for lending. For instance, projects provide training in enterprise analysis to help lenders to better understand the business of agriculture and to make loan decisions with greater confidence and freedom. Training also helps borrowers determine their credit needs, persuade lenders of their creditworthiness and manage debt. To ease barriers of entry, CNFA helps lending institutions to develop capital adequacy requirements and prudential regulations and to move away from traditional, collateral-based lending, towards use of moveable assets and cash flow analysis in decision making.
Supporting Market Diversity & Promoting Innovation
For a financial services market to flourish, it must be demand driven and feature a variety of tailored services. CNFA involves a wide range of actors in its programs, including suppliers offering trade credit and commercial finance, cooperative lending institutions serving entrepreneurs,and SMEs and local and multinational commercial banks. CNFA develops and introduces specialized lending technologies and credit information systems to reduce the administrative costs associated with credit application, monitoring, and payment. These systems also increase transparency in loan decisions and promote sustainable and mutually beneficial financial systems that can support continued economic growth after our assistance ends.
Leveraging Available Resources for Long-term Growth
CNFA links grant support and technical assistance to locally available commercial credit resources. This link helps business partners to source outside capital for cost sharing in executing their projects and also helps to catalyze local investment in economic development projects.
Working with Policy Makers
CNFA’s uses a combination of advocacy and public awareness efforts—using real business cases— to illustrate the impact of legal and regulatory frameworks that are essential to developing innovative financial instruments, such as venture capital, small equity investments, trade credit and leasing.
Related Projects
Georgia: Agribusiness Development Activity
Georgia: Georgia Agricultural Risk Reduction Program
Ghana: Commercial Strengthening of Certified Cocoa Production in Ghana
Haiti: Market Chain Enhancement Project (MarChE)
