Eda has 10 years of experience in financial services with a focus on inclusive finance for agricultural SMEs and digital financial services. Her current work at CFI includes providing data insights and analysis, advanced analytics, and product development services across various projects.
Eda previously worked as an internal auditor and as an SME account manager at commercial banks in Albania. Passionate about academia, she has also served as an assistant professor on the University of Tirana’s economics faculty.
She holds a master’s degree in economics and finance from the Institute of Economic Studies at Charles University in Prague and a bachelor’s degree in economics and international relations from the American University in Bulgaria (AUBG).

Senior Research Specialist

Eda Dokle

Chantelle Macey

The fintech expansion in low- and middle-income markets faces numerous challenges, but the sector continues to be an area of significant opportunity and innovation. CFI breaks down four key trends in fintech funding today and urges investors to continue supporting inclusive fintechs toward sustained growth.

Blog Post

Over the last few years, the pandemic-induced transformation of the global economy has fueled a rapid expansion of the fintech sector. This evolution has revealed the potential of fintech to eliminate geographical and physical barriers and enable consumers and providers to gain unprecedented access to information, creating a more efficient, inclusive global financial system.

Nonetheless, the fintech expansion in low- and middle-income markets faces numerous challenges, and several unanswered questions linger. Will the fintech sector maintain its momentum? How will it evolve in a post-pandemic world? What unforeseen challenges await? These queries spotlight the intriguing unknowns within the sector.
<blockquote class="pullquote--right">While inclusive fintechs have expressed their commitment to continue serving low-income and vulnerable segments, their ability to sustain that commitment depends on funding. </blockquote>
Earlier this year, we interviewed 12 winners of the <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> (IF50) competition and six fintech investors to assess their performance amidst numerous macroeconomic challenges like rising interest rates, decreased food supply, and large price gains. In June 2023, we published the findings of these conversations in a recent report, <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/06/IF50-2019-2022-Report.pdf">Inclusive Fintech Funding in Times of Uncertainty</a>, which underscored the commitment of inclusive fintechs to serve low-income individuals. To ensure success, these companies are bolstering their emphasis on core business principles, prioritizing customer needs, and actively working toward substantial revenues and profits.

While inclusive fintechs have expressed their commitment to continue serving low-income and vulnerable segments, their ability to sustain that commitment depends on funding. To better understand the fintech funding landscape, we analyzed funding data provided by <a href="http://www.briterbridges.com/" target="_blank" rel="noopener noreferrer">Briter Bridges</a> from different periods, regions, and market segments. Nearly 75 percent of the fintechs in this dataset have raised capital up to Series B deals. Our analysis focused on four regions: Latin America &amp; the Caribbean, the Middle East &amp; North Africa, Sub-Saharan Africa, and South Asia. From South Asia, Briter Bridges only collected data for India. From the Briter Bridges data, we examined funding deals from January 2015 to February 2023 and identified four key trends in fintech funding.  
<h1>1. Fintech funding is slowing down globally.</h1>
Since 2015, fintech funding has consistently trended upward – both in terms of the number of deals and total deal volume – with a minor slowdown in 2020 during the COVID-19 pandemic and a significant surge in 2021. Notably, the number of overall deals increased from 484 in 2020 to 851 in 2021, while the total deal volume rose by 96 percent – from USD $5.3 billion in 2020 to $10.4 billion in 2021.

Among the regions, South Asia (representing data only from India) experienced the highest increase in total deal volume since 2015, followed by Latin America &amp; the Caribbean, the Middle East &amp; North Africa, and Sub-Saharan Africa. The surge across all regions indicates a promising industry landscape and highlights investors’ interest in fintech across geographies.

[caption id="attachment_46199" align="aligncenter" width="1239"]<img class="wp-image-46199 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.21.01-PM.png" alt="" width="1239" height="640" /> Source: Briter Bridges data for fintech deals from 2015 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

However, in 2022, the growth in both deal volume and the number of deals was more modest, with a 10 percent increase in deal volume and a 2 percent increase in the number of deals. The number of deals declined or remained stagnant in India, the Middle East &amp; North Africa, and Latin America &amp; the Caribbean, while it increased in Sub-Saharan Africa.

Then, in January and February 2023, the sector witnessed a significant 54 percent decrease in overall deal volume compared to the same period in 2022. Of the four regions, the Middle East &amp; North Africa was the only region to see an increase in overall deal volume during this period, with all others declining.

By Q3 2022, industry stakeholders began experiencing a ‘<a href="https://bfsi.economictimes.indiatimes.com/news/fintech/how-cold-is-the-fintech-funding-winter-when-will-the-crisis-end/96054281#:~:text=1%29%20What%20is%20the%20FinTech%20funding%20winter%3F%20Funding,FinTech%20startups%20particularly%20are%20facing%20this%20funding%20winter." target="_blank" rel="noopener noreferrer">fintech funding winter,</a>’ a term that references the current state of declining funding opportunities and company valuations across the fintech sector. Since then, there has been a <a href="https://www.cbinsights.com/research/report/fintech-trends-q2-2023/" target="_blank" rel="noopener noreferrer">noticeable decrease in funding and deals</a> within the global fintech ecosystem during Q2 2023, reaching the lowest level since 2017. In Africa, there was a significant <a href="https://thebigdeal.substack.com/p/winter" target="_blank" rel="noopener noreferrer">37 percent year-on-year decline</a> in total transaction value for African start-ups between June 2022 and July 2023 compared to the same corresponding period in the prior year.
<h1>2. Funding remains geographically concentrated with a regional disparity in deal sizes.</h1>
We also observed significant variation in the median deal sizes across different regions. In 2022, the median deal size in Sub-Saharan Africa was $1 million, reflecting the prevalence of very early-stage fintechs. In contrast, the median deal size in 2022 was $6.5 million for fintechs in Latin America &amp; the Caribbean region and $6.4 million in South Asia. This difference illustrates how regions have distinct funding dynamics and growth trajectories.

Looking at trends over the past four years, we see that from 2020 to 2021, the median deal size remained unchanged in South Asia while increasing in the other three regions. From 2021 to 2022, the median deal size increased across all regions except the Middle East &amp; North Africa, which stayed constant.

[caption id="attachment_46200" align="aligncenter" width="1276"]<img class="wp-image-46200 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.22.14-PM.png" alt="" width="1276" height="554" /> Source: Briter Bridges data for fintech deals from 2019 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

In the dynamic world of fintech funding, four countries – India, Brazil, Israel, and Mexico – received 80 percent of the overall funding in recent years. India leads with a total funding volume of $22 billion between 2015 and 2023, showcasing its thriving fintech ecosystem and investors’ support. Brazil and Israel both secured $4.5 billion in total funding volume, with Mexico attracting $3.7 billion. Funding to Brazil, Israel, and Mexico captured a considerable share of their region’s funding (40 percent, 65 percent, and 32, respectively).

Examining the period from 2020 to 2022, we see that the total deal volume increased in all four countries in 2021. However, in 2022, the total deal volume increased in India and Mexico but declined in Brazil and Israel.
<blockquote>Limited access to formal financial services, combined with rapid digitization in recent years and favorable regulatory frameworks, all contribute to these four countries attracting the majority of regional fintech funding.</blockquote>
Two factors have driven access to funding in these countries. First, consumer demand and unmet needs revealed significant market potential. Second, a conducive enabling environment in the form of regulations and policies encouraged innovation by financial service providers and adoption by consumers. Limited access to formal financial services, particularly credit for low-income individuals and MSMEs, combined with rapid digitization in recent years and favorable regulatory frameworks, all contribute to these four countries attracting the majority of regional fintech funding. For example, in India, <a href="https://www.bain.com/insights/india-fintech-report-2022-sailing-through-turbulent-tides/" target="_blank" rel="noopener noreferrer">initiatives</a> like the Jan Dhan-Aadhaar-Mobile (JAM) trinity, the Unified Payments Interface (UPI), and updated regulations and policies accelerated digital adoption during the pandemic. Rapid digitization has benefited emerging fintech players, boosting digital financial solutions and driving financial inclusion.

[caption id="attachment_46196" align="aligncenter" width="1101"]<img class="wp-image-46196 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.12.02-PM.png" alt="" width="1101" height="505" /> Source: Briter Bridges data for fintech deals from 2020 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

While no African countries made it to the list of the top four countries with the largest funding in recent years, Nigeria stood out with the highest deal volume among African countries. It received a modest accounting for 40 percent of the region’s overall funding.
<h1>3. Regional variations in the demand for financial products influence funding distribution.</h1>
The distribution of funding by fintech product categories has shifted over time. Historically, credit products received the bulk of the funding within the fintech sector. Insurance, which typically receives lower levels of funding, surged in 2020 as the pandemic <a href="https://www.bcg.com/industries/insurance/the-strategic-role-of-insurtechs-post-covid-19" target="_blank" rel="noopener noreferrer">accelerated the demand for digital transformation</a>. Insurance fintechs that were able to innovatively leverage digital and analytics became more attractive to investors. Additionally, we observed an increase in the share between 2018 and 2021, although this category declined in 2022. There is also an upward trend in the popularity of personal financial management products (PFM), as <a href="https://www.businessinsider.com/personal-finance-management-market" target="_blank" rel="noopener noreferrer">more fintechs and digital banks begin offering PFM products or PFM features</a>.

[caption id="attachment_46201" align="aligncenter" width="1197"]<img class="wp-image-46201 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.23.55-PM.png" alt="" width="1197" height="661" /> Source: Briter Bridges data for fintech deals from 2015 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

Looking at the breakdown of regional fintech funding by product category, we see the importance of catering to the unique financial demands of specific markets. For example, funding for credit fintechs dominates overall fintech funding in South Asia and Latin America &amp; the Caribbean, while the Middle East &amp; North Africa focuses on DFS infrastructure and PFM, and Sub-Saharan Africa prioritizes payments and remittances. Despite the ways in which insurance can enhance the resilience of low-income households, insurance products continue to receive minimal investor attention across all regions. Insurance products are typically offered as part of a product bundle and continue to be <a href="https://static1.squarespace.com/static/5bede261f2e6b1e5ead0a0ba/t/6399ed1a42246a3d457d56cd/1671032094317/IF50+2022+Insights+Deck.pdf" target="_blank" rel="noopener noreferrer">difficult to market and sell</a>.
<h1>4. The funding gap for small deals could contribute to the ‘death valley curve’.</h1>
Looking at the past deals of the top 20 investors, we see a discrepancy among different types of funders’ investment strategies and risk appetites. Accelerators and incubators have a higher number of deals, but their median deal size remains relatively modest – often below $500,000. On the other hand, private equity, venture capital, and impact investing funds have median deal sizes ranging from $7 to $20 million, reflecting their substantial investment capacity.

We also see a dip in the number of deals targeted for early-stage fintechs – in the amount of $501,000 – $1 million – by any investor type. In 2020, despite an overall increase of more than 70 percent in the number of total deals that year, the proportion of deals within the $501,000 – $1 million range was only 8 percent. The proportion of deals conducted for this size bracket has remained consistently between 7 to 9 percent over the past 4 years, likely contributing to the ‘<a href="https://hbr.org/2022/04/an-entrepreneurs-guide-to-surviving-the-death-valley-curve" target="_blank" rel="noopener noreferrer">death valley curve’</a> experienced by start-ups.

[caption id="attachment_46198" align="aligncenter" width="702"]<img class=" wp-image-46198" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/IF50-blog-post-graph5.png" alt="" width="702" height="440" /> Source: Briter Bridges data for fintech deals from 2015 to 2022, excluding mega-deals over $100M.[/caption]
<h1>Winter is Here</h1>
While global trends indicate that we are living in a fintech funding winter, not all hope is lost. The fintech sector continues to be an area of significant opportunity and innovation, attracting attention from investors globally. Recent funding trends highlight the dynamic nature of fintech investments, as fluctuations in deal volume, regional preferences, and investor interests impact the funding fintechs receive. In addition, because fintech funding responds to specific characteristics of national economies and factors that create an enabling environment – such as the speed of digitalization, level of innovation, regulatory frameworks, and funding gaps for low-income populations – it is useful to observe trends in the fintech industry to understand the market demand and needs for various financial solutions in different markets.

Fintech investors and other stakeholders should adopt a balanced perspective, draw upon the lessons learned from past successes and failures, and continue supporting inclusive fintechs that offer products to low-income households. By doing so, they can effectively guide inclusive fintechs toward sustained growth and impactful outcomes.

Exploring Fintech Funding Dynamics in Recent Years

CFI interviewed 12 past Inclusive Fintech 50 winners and 6 investors focused on early-stage inclusive fintechs who share their perspectives on the current macroeconomic and funding landscape and their actions to navigate the uncertainties.

Report

Slowing economic growth, rising inflation, and climbing interest rates are straining the business models for inclusive fintechs, creating significant uncertainty and new funding challenges. For the past four years, the <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> (IF50) global innovation competition identified and elevated cutting-edge, emerging inclusive fintechs driving financial inclusion. These high-potential start-up fintechs address limitations in financial services delivery for unserved or underserved customers by offering a solution among credit, insurance, payments &amp; remittances, savings &amp; personal financial management, or infrastructure.
To better understand the outlook for the sector amidst these market changes, CFI interviewed past IF50 winners and fintech investors to learn how they are adapting to these uncertain times and the impact of the funding challenges on their business models and the low-income customers they serve.
CFI’s latest report has found:

<ul data-rte-list="default">
 	<li>
The total value of deals for early- and growth-stage inclusive fintechs plunged 75 percent in January and February this year from the same time a year ago.
</li>
 	<li>
The median deal size for growth-stage fintechs appears to drop from $20 million in Q1 2022 to $4.5 million in the first two months of 2023.
</li>
 	<li>
Despite the funding pullback, inclusive fintechs say they remain committed to serving low-income and vulnerable communities.
</li>
 	<li>
Investors expect more failures in the short term, but they are cautiously optimistic that the market shakeout will create a healthier sector in the medium term.
</li>
 	<li>
Business fundamentals is the name of the game today for both fintechs and investors. Business fundamentals is the name of the game today for both fintechs and investors. They are focusing on keeping operational costs low, responding to customer needs, and creating a path to sustainability and profitability.
</li>
</ul>

Inclusive Fintech Funding in Times of Uncertainty: Lessons Learned and Challenges Ahead

CFI spoke with Rosita Najmi to reflect on her 20+ years in global development and her personal relationship with poverty that has shaped her strong desire to empower others.

CFI Advisory Council Member Rosita Najmi has over 20 years of experience in global development, but she attributes her initial connection to financial inclusion to a personal relationship with poverty as a young refugee who came to the United States from Iran with her family.

Originally a field researcher and social entrepreneur, she has also worked across leading international NGOs to advocate for and employ financial services as a tool to empower and improve the lives of low-income people. As a development economist, she helped stand up the first World Bank global practice for financial inclusion. She then transitioned from operations and development policy functions to funder roles -- across impact investing, private philanthropy, and now corporate philanthropy. She is a long-time and devoted champion of gender equality, and her contributions include efforts to advance women’s economic empowerment, including the creation and funding of <a href="https://www.findevgateway.org/finequity" target="_blank" rel="noopener noreferrer">FinEquity</a> and the <a href="https://data2x.org/financial-inclusion/" target="_blank" rel="noopener noreferrer">Data2X Women’s Financial Inclusion Data Partnership</a>. Currently, Rosita serves as a VP of Social Impact at The UPS Foundation, leading strategy, innovation, grantmaking, and measurement, evaluation, and learning (MEL).

As Rosita reflects on her career, she contemplates the meaningful way that her professional roles, and the specific order in which they happened, have enabled her to optimize her impact. As a CFI Advisory Council member since January 2022, she continues to work toward achieving a goal that her late mother regularly encouraged: “Make your life count!”
<h3>1. How did you become involved in inclusive finance and what are you working on now? </h3>
RN: My connection to financial inclusion is rooted in a personal relationship with poverty. My family — my late mom, three older siblings, and I — <a href="https://www.hbs.edu/mba/student-life/people/Pages/portrait-project.aspx?profile=rnajmi~pp" target="_blank" rel="noopener noreferrer">came to the United States from Iran as refugees</a>. We brought three suitcases and $3,000 cash, which my then 15-year-old brother carried in his pockets.

I remember well the judgment and discrimination my family and I faced while living in poverty. I grew up in Tennessee, where there was racism and judgment of families who received government welfare, such as food stamps, which mine did. At that time, food stamps were pieces of paper so it was easy for others to notice when my mom used them at the grocery store.

As early as elementary school, I used to help my mother with her bank account and finances. I couldn’t even reach the counter to see the bank teller! But, because of her accent and English being her second language, my mother was not confident, and I would often help communicate with the bank teller on her behalf.

This personal journey with access to financial services and resources has shaped my priorities and instilled a strong desire to help and empower others, with an emphasis on designing for dignity. I have worked in social and economic development for many years, but my top priority has been to transform financial services into a tool to empower low-income and marginalized people.
<blockquote class="pullquote--right">This personal journey with access to financial services and resources has shaped my priorities and instilled a strong desire to help and empower others, with an emphasis on designing for dignity.</blockquote>
I started my career as a field researcher, social entrepreneur, and founder of an international NGO. These experiences were the best education I could have asked for — more than my formal education — to understand families’ financial hardships around the world and the impossible choices that so many are forced to make every day. When I joined the World Bank as a development economist, I helped develop the Bank’s first global practice for financial inclusion. We created the support template to help countries develop and measure progress against national financial inclusion strategies. After that, and for over a decade, I have been a funder of different types of capital, from impact investing to private and corporate philanthropy.

Currently, I oversee grantmaking, strategy, innovation, and measurement, evaluation, and learning (MEL) at <a href="https://about.ups.com/us/en/social-impact.html" target="_blank" rel="noopener noreferrer">The UPS Foundation</a>. <a href="https://about.ups.com/us/en/social-impact/the-ups-foundation/the-ups-foundation-mission-and-purpose.html" target="_blank" rel="noopener noreferrer">One of the four focus areas</a> is equity and economic empowerment, which includes a focus on women. Whether in accessing finance or moving their goods to markets or across borders, women face unique challenges because of <a href="https://www.centerforfinancialinclusion.org/normative-constraints-to-womens-financial-inclusion-what-we-know-and-what-we-need-to-know">social and cultural norms</a>, limits on mobility and agency, and time poverty, among other barriers. We seek to do our part to remove such barriers. UPS’ equity and economic empowerment portfolio also includes career and college readiness for youth, entrepreneurship, and workforce development.
<h3>2. What key lessons have you learned from past work experiences?</h3>
RN: While funding the <a href="https://www.betterthancash.org/" target="_blank" rel="noopener noreferrer">Better than Cash Alliance</a> (BTCA) during my tenures at both the Omidyar Network and the Bill &amp; Melinda Gates Foundation, I deepened my understanding of the potential of advocacy. Advocacy is a skill set -- a combination of art and science -- that can transform lives, change policies, and move resources to support underserved or marginalized communities. I also learned how blended finance can play a vital role in global sustainable development. I believe we need varying types of capital — a mixed capital stack — for scale and long-lasting impact.
<blockquote>Advocacy is a skill set -- a combination of art and science -- that can transform lives, change policies, and move resources to support underserved or marginalized communities.</blockquote>
Furthermore, learning and sharing experiences through coalitions and alliances is much more efficient and effective than doing it alone. I am a collaborator and connector and have worked on building and supporting multiple global coalitions and alliances around different topics like impact investing, <a href="https://www.findevgateway.org/finequity" target="_blank" rel="noopener noreferrer">women’s economic empowerment</a>, <a href="https://www.ictd.ac/programme/digitax/" target="_blank" rel="noopener noreferrer">tax policy and administration</a>, and <a href="https://www.cifaralliance.org/" target="_blank" rel="noopener noreferrer">climate equity and resilience</a>.

Finally, because of my tenure at <a href="https://www.mercycorps.org/" target="_blank" rel="noopener noreferrer">Mercy Corps</a>, I became a strong believer in market-based approaches that lead to sustainable development and empowerment. In contrast to a beneficiary-focused approach, market-oriented models position populations living in poverty as consumers, producers, employees, or entrepreneurs. Market-based approaches use business models and work to catalyze markets to solve development and humanitarian challenges more sustainably and at scale than time and resource-bound interventions. 
<h3>3. If you weren’t in your current professional role, what would you be doing right now?</h3>
RN: I would spend more time advocating to end human rights violations in Iran, especially in support of <a href="https://web.archive.org/web/20160229174442/https:/www.hbs.edu/mba/student-life/people/Pages/wdydwyd.aspx?profile=rnajmi" target="_blank" rel="noopener noreferrer">women and girls</a> and members of the religion the <a href="https://www.bahai.org/" target="_blank" rel="noopener noreferrer">Bahá'í Faith</a>.
<h3>4. What unique expertise do you bring to CFI’s Advisory Council? </h3>
RN: I strive to bring the following to CFI: (i) my network so I can be a connector for CFI’s applied research; (ii) strategic thinking, especially around creating intersectional outcomes; and (iii) personal experience and passion for designing for dignity and empowerment.

If I had the chance to re-design my career, I would take the same path. The order of my experiences was meaningful; I am a better funder, because I was a grantee first, and I can be an innovator, because I worked in the field, in operations, and on the front lines. I aim to bring my experience wearing these diverse hats to CFI’s Advisory Council.
<h3>5. In one word, what is the current state of financial inclusion today?  </h3>
RN: Transitioning. Many people and organizations have worked hard to build the case for why the sector needs to go beyond solely advancing access. It’s now understood that we cannot declare victory simply when someone opens a bank account and that instead, the customer must build towards resilience to escape poverty and stay out of poverty. Digital financial inclusion can be a tool for both empowerment and equity in development, and it supports government accountability and fiscal transparency, particularly for government subsidies to its citizens and tax administration. Lastly, when I think about the future, especially in terms of climate shocks and war, the need for humanitarian response is increasing at a rapid pace and scale. We must swiftly integrate digital payments into humanitarian responses.  
<h3> 6. What can we learn from fintech that can be applied to financial inclusion?</h3>
RN: Friction management is important. Typically, the goal of payments, especially for access to credit and savings, is to be as frictionless as possible. However, I believe there is a role for friction when it comes to credit. For example, providing notifications or other reminders highlighting an outstanding debt balance would be advantageous when a customer has multiple loans or payment plans. This approach serves the dual purpose of protecting consumers' interests and empowering consumers to stay informed about their financial obligations. In this way, the financial provider is signaling its focus on its bottom line and its commitment to the financial health of its customer.

On the data side, people are already researching and discovering issues related to data misuse, especially data privacy. Fortunately, new laws are helping, but the financial services industry and development actors could also have proactive strategies for the misuse and missed use of data. 
<blockquote class="pullquote--left">The effectiveness of AI relies on the quality of the data employed. If marginalized groups, such as women or people with disabilities, are invisible in the data, these groups are at serious risk of being left further behind.</blockquote>
There is an abundant amount of data being produced, but unfortunately, not all data is used or used optimally. This underutilization can be because of a fear of breaking the rules, especially around data management and governance. Other times, the barrier can be because skill sets are missing in data science. Nevertheless, like how we developed frameworks to guide countries to develop national strategies for driving and measuring financial inclusion, I think there is a need to develop diagnostics and templates that help governments and financial services providers use data to benefit their customers. For example, financial services providers can use data to measure product equity — showing who is using products and services and to what outcomes. Further, governments, academia, civil society, and development organizations can leverage anonymized and aggregated data sets to triangulate with other data sets for insights, innovations, and consumer protection.

I would like to see more ‘data for good’ strategies in the private sector, which can include disaggregating data by <a href="https://data2x.org/" target="_blank" rel="noopener noreferrer">gender</a>, race, and other classifications and considering the quality of data sets that educate artificial intelligence. The effectiveness of AI relies on the quality of the data employed. If marginalized groups, such as women or people with disabilities, are invisible in the data, these groups are at serious risk of being left further behind.
<h3>7. What are the most crucial issues in inclusive finance that we should prioritize over the next five years?</h3>
RN: We are seven years from the 2030 Sustainable Development Goals (SDG) deadline, and the COVID pandemic eliminated years of progress. We must compensate for this loss by pursuing interventions with intersectional outcomes. Therefore, the issues I would prioritize in the next five years include:  
<ul>
 	<li data-leveltext="" data-font="Symbol" data-listid="35" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">The misuse and missed use of data</li>
 	<li data-leveltext="" data-font="Symbol" data-listid="35" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">Climate risks related to food security, a just transition, adaptation, and resilience</li>
 	<li data-leveltext="" data-font="Symbol" data-listid="35" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="3" data-aria-level="1">Gender equality issues related to health and education outcomes, and the social and cultural norms that thwart the full contributions of women and girls</li>
</ul>

Designing for Dignity: Creating Equal Opportunity through Financial Inclusion – Q & A with Rosita Najmi, CFI Advisory Council Member

Andrea Zinn

Reflections on CSAF's 2022 State of the Sector report, highlighting 4 takeaways particularly relevant to the future of agriculture finance.

SMEs in agriculture play a critical role in developing the sector by creating employment, facilitating market access for farmers, and providing inputs, credit, and training for smallholder farmers. However, the <a href="https://isfadvisors.org/wp-content/uploads/2022/04/ISF_AgriSME-Finance-state-of-the-sector-report.pdf" target="_blank" rel="noopener noreferrer">gap in financing to agricultural SMEs</a> is estimated to be billions of dollars and no single actor can bridge this massive gap alone. To help address this, ten years ago a group of seven impact lenders -- Alterfin, Oikocredit, Rabobank’s Rabo Rural Fund, responsAbility Investment AG, Root Capital, Shared Interest Society, and Triodos Investment Management – formed the <a href="https://csaf.org/" target="_blank" rel="noopener noreferrer">Council on Smallholder Agricultural Finance (CSAF)</a> with the goal to expand finance to agriculture businesses that operate in developing countries by creating a platform for like-minded lenders to convene on a regular basis to share data, learning, and experiences on agriculture finance.
<blockquote class="pullquote--right">CSAF aims to improve the livelihood of smallholder farmers and promote environmentally sustainable practices by financing agricultural SMEs.</blockquote>
Today, the CSAF alliance includes 17 lending institution members and affiliates. Since 2013, they have collectively lent over <a href="https://csaf.org/wp-content/uploads/2022/07/CSAF_State_of_Sector_2022.pdf" target="_blank" rel="noopener noreferrer">$5.5B to 1,546 enterprises</a>, reaching 6 million farmers across 81 countries. Aiming to improve the livelihoods of smallholder farmers and promote environmentally sustainable practices by financing agricultural SMEs, CSAF members are impact-driven lenders that prioritize social and environmental impact over financial return by investing in higher-risk, high-impact enterprises.  As CSAF members’ lending meets only a small share of the overall financing demand of agri-SMEs, CSAF’s role in promoting industry standards and best practices aims to engage a wider set of stakeholders to build a more inclusive and impactful finance market that can help bridge the finance gap for agri-SMEs.

In 2014, CSAF members and affiliates began reporting portfolio and client data. CFI has partnered with CSAF since 2020 to collect and analyze data, in an effort to present insights on the landscape of agricultural SME finance. The results from the annual survey are shared in a published <a href="https://csaf.org/csaf-publications/" target="_blank" rel="noopener noreferrer">report</a> and data is made publicly available in the <a href="https://data.csaf.org/" target="_blank" rel="noopener noreferrer">CSAF Data Portal</a>.

Of the takeaways from the <a href="https://csaf.org/publications/2022-state-of-the-sector/" target="_blank" rel="noopener noreferrer">2022 State of the Sector report,</a> CFI found the following four to be particularly relevant as we look to the future of agriculture finance. While focusing on overall trends, the insights zoom in on developments in Sub-Saharan Africa.
<h3>1. Sub-Saharan Africa represented a growing share of lending, as CSAF annual disbursements to agricultural SMEs reached peak levels in 2021. </h3>
Lending to agricultural SMEs in 2021 grew by 35 percent from 2020 – perhaps unsurprising given that CSAF lenders contracted their disbursements in 2020 due to COVID-19 restrictions, marking a growth in disbursements by 18 percent from 2019 pre-pandemic levels. Since 2013 (the year when CSAF members began to report data), annual disbursements have more than doubled, but the increase has not been gradual.

Sub-Saharan Africa saw the greatest increase in disbursements between 2013 and 2021 (+$199M), followed by Central America (+$105M), South America (+$69M), and South &amp; East Asia (+$45M). In 2021, following a five-year trend, Sub-Saharan Africa received the majority of annual disbursements (36 percent), with Cote d'Ivoire accounting for 40 percent of regional disbursements, followed by Kenya, Uganda and Rwanda.

<img class="wp-image-44977 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/08/CSAF-Blog-Post-Graphs-01-e1660328284507.png" alt="" width="776" height="550" />
<h3>2. Lenders focused on serving existing borrowers and faced challenges finding new investment-ready borrowers. </h3>
In 2021, the number of total borrowers declined from 654 agricultural SMEs in 2020 to 641 in 2021, marking an increase of only 13 percent from 2013 to 2021. New client origination remained low in past years, indicating that lenders have focused their attention on existing borrowers, which accounted for 90 percent of total borrowers. CSAF members face challenges in serving first-time borrowers, who are often riskier and require smaller, less-profitable loans that do not allow lenders to operate within their risk-return models.

<img class="wp-image-44978 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/08/CSAF-Blog-Post-Graphs-02-e1660328485632.png" alt="" width="826" height="525" />While experiencing a slight decline in 2021 from 2020, Sub-Saharan Africa reported the most borrowers (47 percent of all CSAF member borrowers), spread across 21 countries. In the past 4 years, Sub-Saharan Africa also experienced the highest borrower turnover – with almost the same number of exiting borrowers as entering, but also the highest number of new borrowers.
<h3>3. Financing to cash-crop value chains (coffee and cocoa) accounted for over 70 percent of disbursements, despite prior attempts to diversify into other crops. </h3>
In 2021, CSAF lenders increased coffee disbursements by 40 percent, in response to increased demand for financing associated with rising coffee prices. Since 2013, coffee has been the most financed commodity by CSAF members, with a high concentration in South and Central America. Attempts to diversify away from coffee and cocoa between 2013 and 2017 were met with increased portfolio-at-risk and lenders returned to expanding financing growth in less-risky coffee and cocoa sectors.

Disbursements to cocoa, the second most financed crop, increased by 36 percent in 2021, driven primarily by growth in Cote d’Ivoire and Ghana. Sub-Saharan Africa is the most diverse region in terms of crops financed, as only 62 percent of 2021 regional disbursements went to coffee and cocoa, compared to 83 percent and 94 percent in South America and Central America, respectively. However, there is still concentration in the region; the increase in cocoa disbursements in Cote d'Ivoire accounted for 45 percent of the regional increase and came primarily because of a few borrowers receiving larger loans.

<img class="wp-image-44979 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/08/CSAF-Blog-Post-Graphs-03-e1660328543415.png" alt="" width="824" height="522" />
<h3>4. Normalized portfolio quality improved as write-offs and restructured loans remained high.</h3>
In 2021, portfolio-at-risk greater than 30 days (PAR30) dropped to 7.4 percent, from 8.1 percent in 2020 value. However, trends differ by loan size and region. PAR30 doubled for loans less than $250K and fell for loans larger than $2M+, with PAR30 for loans less than $250k increasing mostly in Sub-Saharan Africa.

While PAR30 declined, the overall share of outstanding write-offs was 6 percent, with the largest share of write-offs coming from Sub-Saharan Africa. This is an indication of old loans being written off from the data set and a possibility that risk associated with COVID-19 challenges or other events is not yet reflected in the data.

When we asked CSAF members to indicate the reasons for loan delinquency, they tend to highlight factors specific to the enterprises, such as management capacity. However, they also emphasize that these challenges are amplified by uncertainty and volatility in the operating environment, particularly related to climate, market, and political factors.

<img class="wp-image-44980 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/08/CSAF-Blog-Post-Graphs-04-e1660328587658.png" alt="" width="816" height="463" />
<h1>Joining Forces to Contribute to the Sector</h1>
After a few years of data collection, CSAF members realized that while market demand was high, it was difficult to meet. The data confirmed that despite the intentions of the group to meet the finance demand of many agricultural SMEs in developing markets, CSAF lenders increasingly served existing borrowers active in cash-crop value chains through short-term trade finance products at larger loan sizes ($500K+), to ensure impact while maintaining lenders’ financial sustainability.

After several discussions on challenges to serve earlier-stage agricultural businesses with lower loan-size requirements and working in less-developed value chains, CSAF members recognized that they were facing similar constraints. After conducting a <a href="https://www.agrilinks.org/sites/default/files/usaid_-_csaf_financial_benchmarking_final_learning_report.pdf" target="_blank" rel="noopener noreferrer">CSAF financial benchmarking study</a> that demonstrated the elevated risks and lower returns of serving this “missing middle” agricultural SME segment, <a href="https://aceliafrica.org/" target="_blank" rel="noopener noreferrer">Aceli Africa</a> was created as an innovative approach aiming to bridge the finance gap for agri-SMEs in East Africa by incentivizing lenders to serve higher-risk market segments while amplifying impact. This is a clear testimony of CSAF's aim to facilitate dialogue and shift lending behavior among lending practitioners, mobilize stakeholders to develop new solutions that serve excluded agri-SMEs, and engage the broader industry in bringing these solutions to scale.
<blockquote>This is a clear testimony of CSAF’s aim to facilitate dialogue among lending practitioners, mobilize stakeholders to develop new solutions that serve excluded agri-SMEs, and engage the broader industry in bringing these solutions to scale.</blockquote>
In addition to finding new approaches to serve agri-SMEs, CSAF lenders have made progress in tracking impact through aligning on standardized social and environmental impact metrics focused on farm- and enterprise-level practices. However, given the impact of climate change on the livelihoods of smallholder farmers and the importance of climate finance, lenders recognize the urgency for the development of new climate-focused solutions to advance green finance initiatives.

A Decade of Shared Learnings on Agriculture Finance: What Does the Data Tell Us?

Find them in the recent publication, "Mobilizing Agricultural Finance: Toward a Common Language Between Lenders and Agri-SMEs in Sub-Saharan Africa"

<h2>Putting the Metrics Into Practice</h2>
After adopting the bankability metrics, ABC Finance’s loan officer is now able to provide Saida with clear lending requirements and request her to submit the information required. Alternatively, lenders can use a service provider to adopt the metrics if working directly with agri-SMEs is not an option. Once Saida submits the information, ABC Finance can quickly assess her business’ bankability and decide whether to move on to due diligence or not.
Though Saida is a fictitious character, the challenges faced by agri-SMEs like hers are very real. Clear and consistent information requirements by lenders can increase the flow of capital to agri-SMEs, which will have a direct impact not only on Saida’s business but the smallholder farmers and other businesses in her network. Adopting the bankability metrics will allow lenders to improve agri-SMEs’ access to finance.
Want to know more? Read the February 2021 publication, <a href="https://bit.ly/agriSMEmetrics" target="_blank" rel="noopener">Mobilizing Agricultural Finance: Toward a Common Language Between Lenders and Agri-SMEs in Sub-Saharan Africa</a>.

New “bankability” metrics, which incorporate robust sector data and research, aim to further understand how to close the estimated $65 billion financing gap in Sub-Saharan Africa.  

Saida, a founder of an agricultural enterprise, started as a farmer in central Uganda growing sorghum, millet, and rice. A few years ago, she decided to buy equipment to process her crops. Demand increased, and she began buying raw materials from others and processing them as well, slowly growing her business year after year. Saida is now ready to grow even more: her plans include hiring more laborers, renting more storage units, and possibly buying a small plot of land from a neighbor.

Things are looking up for Saida and her family, but there is one challenge she has not yet overcome: financing for business growth. She is struggling to find a financial service provider that lends to small agricultural businesses and understands the opportunities that agriculture brings.

Agriculture plays a significant role in the GDP of Uganda, and ABC Finance, a lender operating in the country, sees broad investment potential. However, ABC Finance finds it challenging to lend to small, agricultural businesses because they cannot confidently measure the risks involved. They request a lot of information upfront to better understand these businesses, but oftentimes these small business owners are not able to provide sufficient documentation to move forward. As a result, ABC Finance continues to finance its existing pool of agricultural businesses, primarily those working with cash crops and in formal markets that request large loan amounts. Moreover, as a result of COVID-19, ABC Finance is focused on renewing loans for existing partners and only financing a limited number of new agri-SMEs because ABC are not able to conduct thorough, on-site due diligence.
<blockquote class="blockquote">A $65 billion financing gap for agri-SMEs means three out of four agri-SMEs don't have the necessary finance to grow.</blockquote>
Businesses like Saida’s are not alone in their struggles to secure loans. There is an estimated USD $65 billion financing gap for agri-SMEs, which means three out of four agri-SMEs don't have the necessary finance to grow. For those agri-SMEs that make it to a lender's radar, CFI and <a href="https://scopeinsight.com/">SCOPEinsight</a> research found that lenders spend an inordinate amount of time and resources sourcing businesses and assessing their bankability, making the process of pre-screening and assessment expensive and leaving out the opportunity for many agri-SMEs to receive lending.

Given some of these limitations, how can ABC Finance easily determine if Saida runs a “bankable” agri-SME?
<h2>The Challenges of Determining an Agri-SME’s Bankability</h2>
In 2020, CFI and SCOPEinsight, as part of our partnership with <a href="https://agra.org/" target="_blank" rel="noopener noreferrer">AGRA</a>, researched over 90 lenders and industry actors and mapped SCOPEinsight and <a href="https://csaf.org/">CSAF</a> data to understand the driving factors behind the significant financing gap. Our research pointed to information – the information requested by lenders and the ability of agri-SMEs to provide information to lenders – as one of the most important obstacles to assessing the creditworthiness of agri-SMEs.
<blockquote class="pullquote--right">Lenders tend to gravitate toward larger businesses and stick with lending to businesses they already know.</blockquote>
Lenders typically collect a long list of information during the pre-due diligence (i.e. screening) phase of a deal. That information often includes generic business metrics and other metrics related to the agriculture sector or social and environmental impact. Many agri-SME’s, particularly smaller enterprises and those that operate in informal markets, struggle to provide formal documentation of their business activities. This is further complicated by the fact that the type of information requested varies significantly from lender to lender, making it difficult for agri-SMEs to prioritize what they should be documenting. As a result, lenders tend to gravitate toward larger businesses operating in formal markets and stick with lending to the businesses they already know.
<h2>Bankability Metrics Address the Information Obstacle</h2>
To address this information challenge, we developed a set of standardized bankability metrics that can serve as a common language between lenders and agri-SMEs. The metrics are intended to be used during pre-due diligence, providing lenders with an overview of the agri-SME's activity that is enough for them to decide whether to continue with due diligence or not. At the same time, standardized metrics will provide agri-SMEs with clear expectations about lenders’ requirements and help them prepare for an assessment more quickly and efficiently. The metrics will reduce the time needed to conduct pre-due diligence and open opportunities to expand lending to the many high-potential agri-SMEs that currently struggle to secure financing.

The bankability metrics focus on business activity, financial performance, management capacity, and governance. The team analyzed the wide variety of metrics used by lenders to identify metrics with the greatest common ground and those that are most effective in screening for creditworthiness. Each lender has a unique risk appetite, so the metrics do not identify benchmarks for bankability, but rather provide a common set of metrics whereby each lender can apply their own assessment to determine creditworthiness.

The Challenge of Bringing Agri-SMEs and Lenders Closer Together

Agri-SMEs play a critical role in food security, and COVID-19 is presenting them with a new set of challenges beyond those they were already facing. However, there are various ways in which lenders can support agri-SMEs in not only overcoming the immediate effects of the pandemic, but also in becoming more resilient to those that will come in the future. The solutions developed and lessons learned in this current crisis may serve to strengthen food security in the long run.

Prior to the onset of COVID-19, very few of us would have foreseen a pandemic spreading so rapidly across the world, forcing governments to take actions like lockdowns and border closures. We have observed how these events found many essential services unprepared and resulted in businesses focusing on “response” and “recovery.” In many countries, the pandemic started as a health crisis, while in Sub-Saharan Africa it started as an <a href="https://www.worldbank.org/en/news/video/2020/04/21/africas-pulse-covid-19-coronavirus-causes-first-recession-in-25-years" target="_blank" rel="noopener noreferrer">economic one</a>, as closures happened quicker than the virus spread.

Despite the fact that many agricultural value chains are considered an essential service, agri-SMEs in Sub-Saharan Africa are still facing a <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">decline in demand</a> (particularly those providing farm inputs), <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_Summary_FINAL.pdf" target="_blank" rel="noopener noreferrer">liquidity shortfalls</a>, harvesting and production problems due to labor shortages, <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_FINAL.pdf" target="_blank" rel="noopener noreferrer">export and transportation delays due to lockdowns</a>, and cancelled international contracts. All these challenges are exacerbated by ongoing climate change-related shocks, like droughts, floods and <a href="https://www.nationalgeographic.com/science/2020/02/locust-plague-climate-science-east-africa/" target="_blank" rel="noopener noreferrer">locust plagues</a>. The resilience of agri-SMEs (small and medium-sized businesses that are formal and registered entities engaged in agricultural production) is being tested with these events.

While it is too early to estimate the full economic impact of COVID-19 on agri-SMEs, most lenders are taking steps to address the most pressing challenges faced by these agri-SMEs. Though it is prudent to move quickly to overcome these challenges, agri-SMEs would be better supported in the long run if lenders approach these problems through a systemic lens to understand the root of the challenges instead of focusing only on the symptoms of the overall shock.

Aside from the lack of infrastructure, agri-SMEs’ biggest challenge to growth is their limited access to finance and the regulatory burdens constraining this access. As will be discussed below, these challenges are deeper and more structurally embedded, and therefore require a long-term coordinated commitment to provide agri-SMEs access to capital.

This post highlights steps lenders are currently taking to help agri-SMEs weather the storm and suggests areas where they can expand their focus to support these businesses in being better prepared for future economic shocks.
<h2>Explore new options to mitigate risk and increase capital flow to agri-SMEs</h2>
Since the outbreak of the pandemic, most lenders have focused on serving existing clients by increasing their financing, restructuring loans, or deferring payments to meet their clients’ liquidity challenges. By doing so, lenders are also making sure their current portfolio is not at immediate risk.
<blockquote>It’s essential that lenders offer non-traditional options to mitigate risks and increase the flow of capital to agri-SMEs.</blockquote>
While lenders may be tempted to take a more conservative stance, those with sufficient capacity should be initiating even more new deals in order for agri-SMEs to keep goods and services flowing through the highly interdependent agricultural value chain. For instance, <a href="https://datastudio.google.com/u/0/reporting/0f453d56-7fef-4823-8cd2-b2bd02773603/page/TP9WB" target="_blank" rel="noopener noreferrer">72% of MSEs in Zambia</a> need working capital to continue and grow their business, and <a href="https://datastudio.google.com/u/0/reporting/0f453d56-7fef-4823-8cd2-b2bd02773603/page/TP9WB" target="_blank" rel="noopener noreferrer">61% are running on their savings</a>. COVID-19 is exacerbating the financing gap, and it’s essential that lenders offer non-traditional options to mitigate risks and increase the flow of capital to agri-SMEs.

Luckily, lenders have successful examples which they can use to build new and more innovative risk mitigation options. Credit guarantees, such as non-bank financial instruments that mitigate default risk for lenders in Sub-Saharan Africa, are a known practice. Between 2008 and 2015, AGRA worked with several partners to offer several guarantees to extend credit to many agriculture value chain actors in Africa, demonstrating the bankability and feasibility of investing in perceived risky agricultural businesses. Additionally, <a href="https://aceliafrica.org/" target="_blank" rel="noopener noreferrer">Aceli Africa</a> has developed a new market platform that aims to incentivize financial service providers to lend to agri-SMEs while also providing technical assistance to them.
<h2>Create new strategies to find and support agri-SMEs</h2>
Many agricultural lenders are reporting that servicing new clients has either stopped or dropped to low levels, not just because of risk concerns, but also because it is almost impossible to conduct thorough due diligence without on-site visits. Given that on-site visits may not be feasible in the near-future, lenders will want to design creative strategies and leverage data to support remote discovery of new agri-SMEs.
<blockquote>Promising agri-SMEs will become more visible to lenders by providing a common set of standard bankability metrics.</blockquote>
To this end, in early 2020, MIX and SCOPEinsight formed a partnership with the support of AGRA to help address the financing gap agri-SMEs face. Through this partnership, they are <a href="https://www.themix.org/news-blog/mix-and-scopeinsight-launch-partnership-with-agra" target="_blank" rel="noopener noreferrer">building bankability metrics</a> so that agricultural lenders can identify and pre-screen agri-SMEs. These metrics play an even more important role now due to COVID-19 disruptions, and they will feed into a portal which will bridge the information gap between agri-SMEs and lenders. As a result, promising agri-SMEs will become more visible to lenders by providing a common set of standard bankability metrics that lenders can use to reduce their costs to serve SMEs. By employing bankability metrics, lenders will be able to assess the potential for growth of agri-SMEs, which currently handle <a href="https://agrf.org/dealroom/wp-content/uploads/2020/07/AGRA-AGRF-Deal-Room-talk-by-Tom-Reardon-july20-2020-final-sent.pptx" target="_blank" rel="noopener noreferrer">680 million tons of food in Africa</a>.
<h2>Offer appropriate technical assistance to agri-SMEs</h2>
<blockquote>The key to this kind of support is that it offers business development assistance that is based on a high knowledge of the value chains and challenges.</blockquote>
Several of the lenders we spoke with are increasingly providing technical assistance to agri-SMEs, recognizing that in these extraordinary times, agri-SMEs are looking for direction. Lenders are offering guidance and training on financial management, crisis management, and operating a business with limited resources. After conducting a <a href="https://rootcapital.org/wp-content/uploads/2020/06/COVID-19-client-survey-report_JUNE-2020.pdf" target="_blank" rel="noopener noreferrer">survey on COVID-19's impact on 134 of its clients</a>, Root Capital decided to offer virtual technical support through its advisory team in four areas: crisis management, emergency operations, financial management and analysis, and digital data collection and analysis.

While technical assistance is not new and is already being offered to SMEs by many organizations, the key to this kind of support is that it offers business development assistance that is based on a high knowledge of the value chains and challenges, with the main goal to support agri-SMEs to grow and become bankable organizations. Helping agri-SMEs become more bankable, and thus more professionalized and visible to other lenders, can assist them to overcome barriers to financing and become more resilient and better equipped to face future risks and shocks.

Going forward, the uncertainty of this pandemic makes it unclear how the next season or harvest will affect agri-SMEs, who are <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">highly interdependent actors in an agricultural value chain</a> where one simple disruption in the flow of goods and services creates challenges for other actors. Along with prioritizing their existing clients, as they are currently doing, lenders could consider the crisis an opportunity to employ long-term strategies that can help agri-SMEs grow into resilient institutions. Coordinated responses and actions by lenders and other actors will play a critical role in ensuring that these businesses are strong enough to continue to feed the world in the face of new pandemics and other global challenges to come.

&nbsp;

Eda Dokle

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