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LiveBlog: Rural Finance in Africa: It’s Our Opportunity

By Opportunity International

Sixty-five percent of the sub-Saharan African labor force is employed in agriculture, yet the region’s agricultural sector receives just 4% of official development assistance. In this breakout session, http://www.opportunity.org/blog/john-magnay-on-food-security-in-africa-and-agricultural-finance/John Magnay[/intlink] discusses how Opportunity effectively reaches agricultural clients with microfinance services, and he details strategies he’s developed to support the rural sector using a range of savings, loans and insurance products, and recruiting and training technical staff to support rural activities. In 2010, he has been concentrating on Opportunity banking operations in Malawi, Ghana, Mozambique, Uganda and Rwanda.

Issues for farmers in rural Africa:

  • Once farmers plant crops, it can be six months before they see any profits, so microfinance is the key to helping them make ends meet through the growing season. Otherwise, they will either turn to informal money lenders or they will short sell their crops for less than half their worth.
  • “We’re starting with a blank slate. Few organizations have been able to do it before, so we have carefully determined the strategies that we feel confident will make our agricultural finance successful.”

Strategies to mitigate risks:

  • Recruit and train talented http://www.opportunity.org/blog/interview-with-ghana-agricultural-finance-officer/agriculture finance officers[/intlink]
  • Identify key commercial enterprises and crops, and invest primarily in those so do not spread resources too thin
  • Develop strategic partnerships with other stakeholders in the rural model
  • Manage cost of production by knowing information about clients, such as land and client profiles, through tools like GPS mapping, family questionnaires
  • Variety of crops is key so that farmers in the area do not try to sell their crops to market at the same time.

Delivery methods of services to rural clients:

  • Bank branches
  • Kiosk banks
  • Container banks – inexpensively-made, pre-fab structures transported by truck to remote markets or other rural areas. “This is especially important in places like Mozambique,” says Magnay,”where there is low population density.”
  • ATMs
  • Points of sale (POS)
  • Mobile banks
  • Mobile phone banking- http://www.opportunity.org/blog/cell-phone-banking-examination/Opportunity International Bank of Malawi (OIBM)[/intlink] rolled out mobile phone banking to clients in 2010
  • Village mobilizers- “One of the most important delivery methods: like a bank manager without an office,” Magnay says. These individuals help people access financial services by helping them fill out crucial forms and helping them with other processes.

Continue to check in with the Opportunity blog for more coverage of the Fall Microfinance Conference.

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