Investment opportunities in smallholder finance are often overlooked by impact investors in favour of serving less risky client segments that are easier and currently more profitable to reach. Despite the twin challenges of high transaction costs operating in rural areas and high risks in the agricultural sector, the prevalence of smallholder farming as the predominant activity for 450m farming families globally means mobilising more resources is essential if we are to effectively deploy market-based mechanisms which can benefit some of the world's most underserved populations. There is a need to fund innovation that can reduce both costs and risk in smallholder finance, but also to replicate existing success stories of smallholder finance by Propagate members and others. Alongside increased smallholder investment, complimentary increases in investment in agricultural SMEs will further enable improved access to valuable goods, services and markets for smallholder producers.
- Harry Davies, Manager of Program Investments at Ceniarth