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Call to Action

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There is a need for the agricultural finance sector to think dynamically and long-term through a rural pathways lens to ensure rural transformation is both effective AND inclusive.
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While moving from a static to a dynamic view of rural clients seems subtle, we believe it will be transformative for all actors involved in rural financial service delivery. The rural pathways model opens up the possibility for vitally important conversations between relevant national governments and the myriad of funders, service providers, and civil society actors involved in supporting inclusive rural transformation. The rural pathways model also changes the way we, as a sector, conceive of service provision. With this understanding should come appropriate changes in how service providers tailor products, bundle offerings, and communicate with their clients.

What will success look like for the sector?

Providers and funders adopt a new language around rural service provision that describes needs, services, and challenges in a dynamic way around pathway transitions and inclusive agricultural transformation.

Providers design services and product features with specific transitions, evolving customer needs, and target outcomes in mind.

Providers and governments cooperate in support of a shared, emerging vision for inclusive agricultural transformation and pathways to progress.

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A new conversation around “smart subsidy” in rural finance service provision is now possible with a more sophisticated mapping of outcomes and profitability profiles through a rural pathways lens.
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For many years, subsidy has been used to support rural service provision without the frameworks or data to systematically decide where it is needed and how it should be applied. The client and service delivery model distinctions introduced in this report—combined with a more sophisticated mapping of outcomes and profitability profiles—can support a new conversation around “smart subsidy.”

As described in this report, we believe that capital providers of all types will better match their subsidy to service providers as different asset classes are made clearer and more transparent. This will involve efforts to build out many of the concepts and frameworks introduced in this report. But we believe that, as standards and benchmarks are established, scarce subsidy will begin to be applied in smarter, more efficient and high-impact ways.

What will success look like for the sector?

Thought leaders articulate fundamental differences in the profitability and impact of service delivery models to provide a real basis for comparison and learning about where and why subsidy is needed.

Providers, funders, and thought leaders develop harmonized impact areas, outcomes, and metrics to be used as a shared basis for comparison about outcomes of service provision.

Funders and thought leaders publish benchmarks from portfolio-level analyses of comparable models, outcomes, and financial returns to create a basis for establishing where, why, and in what forms subsidy is needed.

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Digitally-enabled innovations in credit scoring, distribution infrastructure, farmer training programs, and more are transforming financial service provision, but these early developments require a new level of investment support to ensure that innovation continues.
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The use of digital technologies is dramatically changing the landscape of service provision for rural agricultural finance. However, early experimentation must evolve into proven, scalable solutions. This transition requires another stage and type of investment, by both service and capital providers, to ensure that early innovations don’t stall.

What will success look like for the sector?

Funders make appropriately structured and patient follow-on financing available to support early innovators and later adopters who will take innovations to scale.

Providers continue to evolve innovative use cases into scalable and refined solutions.

Thought leaders and researchers continue to support the innovation process, building the evidence on the financial and impact returns of digital innovation, how different models achieve those returns, and what new investments they require.

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Now is the time for continued innovation around how capital comes to market to support the plethora of service providers pushing the boundaries of what is possible in the rural agricultural finance sector.
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Though the number and diversity of capital providers for rural agricultural finance has exploded over the last decade, the capital needed to close the gap on service provision is still far more than what can be provided through traditional channels. As innovation in service provision creates more viable service delivery models, the capital market will need to respond in lockstep. This requires more effective connections between capital need and right-fit capital supply, as well as advances in the structures used to deploy capital.

What will success look like for the sector?

Funders develop new blended finance approaches, structures, and examples to enable more commercial capital to flow into the sector.

Consortiums of development finance institutions, foundations, and other funders come together to leverage different forms of complementary capital that builds a foundation for scalability.

Donors and impact-driven funders providing early-stage innovation funding actively support the transitions of innovators from seed to larger commercial funding needed to scale up.

Intermediaries aggregate capital needs to make them more transparent, allowing funding to flow while naturally defining asset classes that can be considered at a portfolio level.

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