The Smallholder and Agri-Food SME Finance and Investment Network or SAFIN held its first workshop and second working meeting on 27-28 November 2018. The secretariat of the Global Donor Platform for Rural Development was present to report on the discussion, outcomes and the possible cooperation possibilities. The discussions are of particular interest to the inclusive agribusiness and trade workstream. The workstream consists of donor agencies interested in providing finance for sustainable, inclusive business models in the agricultural sector and the development of value chains that links producers to markets and therefore finance. Agreement on principles for inclusiveness and sustainability on political level will help guide private investors, easing their reporting and at the same time creating the pathway for farmers’ projects that address the bankable priorities of finance suppliers. Additionally, policy coherence between the trade and agricultural sector will help build sustainable value chains and create the institutional framework that fosters economic growth and opens the capital market.
Looking at the finance demand side
In contrast to other organisations and networks, SAFIN is looking at the demand for finance and investments from agri-food and rural SMEs and more specifically at the factors and conditions that make demands bankable or not. The first session of the workshop focused exactly on the demand for finance and the role of farmer organisations and cooperatives. Presentations showed how such organisations support farmers in representing their interests and demands, and in facilitating access to finance. Representatives from farmer organisations summarised the main challenges farmers face when trying to access finance – lack of financial history, weak land tenure system, lack of reliable market linkages and lacking of understanding about agricultural processes from the side of the finance suppliers.
Linking demand for and supply of investments
In another session, the participants discussed the need to strengthen capacities of commercial banks. That involves enabling banks to communicate with SMEs, but also to promote dialogue across different institutional communities and build the institutional framework that is conducive to inclusive capital market development. In the different sessions, panellists discussed mapping initiatives and knowledge generating tools on the supply and demand side and governance models to accommodate demand drive approaches to development finance.
Future cooperation possibilities between the Platform and SAFIN
On the second day of the workshop, the participants discussed SAFIN’s workplan and priority settings for next year. It was agreed to focus on five workstreams:
- Mobilising finance
- Alignment of investments
- Global policy engagement
- Knowledge agenda coordination
The secretariat will continue to actively contribute to and participate in the upcoming SAFIN meetings. All workstreams are focusing on issues related to the work of the Platform. The secretariat will explore the cooperation and coordination possibilities, once the activities are clearer. Special attention will be paid to the activities under the mobilizing finance and global policy engagement work streams.