Facilitating Financial Linkages for Smallholder Producers in Nicaragua

Linking borrowers and lenders through external intermediaries
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This paper highlights the role that Catholic Relief Services (CRS) and its implementing partners have played in creating effective linkages between financial service providers and smallholder producers in Nicaragua.

Finance is critical for smallholder producers to successfully engage in value chain initiatives. Financial institutions are often reluctant to lend to smallholder producers. The role of an external intermediary is often important to bridge the gap between smallholder producers and financial service providers.

Alliance to Create Rural Business Opportunities through Agro-Enterprise Relationships (ACORDAR), a project by CRS, aims to increase income of poor families, ensure permanent employment and strengthen the commercial capacity of 7,000 poor rural families in 50 Nicaraguan municipalities. CRS’s implementation partners for ACORDAR include Lutheran World Relief, the Aldea Global Association of Jinotega and TechnoServe. The project demonstrated that:

  • External intermediary’s reputation, accompanied by investment in smallholder producer capacity building is sufficient guarantee for investments;
  • Support organizations should only play a temporary role in intermediation;
  • Support organizations should prioritize capacity building activities for smallholder producers;
  • Farmers should be aware of the limitations of each financial solution so that they can make informed decisions.

About this Publication

By Shriver, J. & Rowe, W.