ODA is Not Dead: Why Public Aid Flows Are Still Relevant


People outside remittance centers in Malaysia. Photo by: baklavabaklava / CC BY-NC via Devex.

Last week, congressional leaders in the United States passed a $1.1 trillion spending bill for the coming year that includes an overall foreign aid budget 5.6% lower than current levels and 16% lower than it was in 2010.

Some global development thinkers would argue that this drop in funding from the world’s top foreign aid donor is no cause for concern, as private flows – not aid – are the most critical drivers of economic development.

But while private flows such as foreign direct investment (FDI) and remittances dwarf official development assistance (ODA) in total dollar amounts, those numbers don’t show the full picture. Paul Callan, Jasmin Cooke, and Andria Thomas argue in Devex that ODA is still very relevant as it is critical for improving public services and meeting basic human development needs.

They write:

One impact of financial flows into a country is to generate economic demand and growth. The flows act as an “economic stimulus package”: People receiving the money have more to spend, which increases the income for other people and hence their spending, and so on. For this impact, it doesn’t matter much where the money comes from, at least in the short term. Hence, private flows are indeed becoming more important than aid, even in least-developed countries, as a stimulus for increasing economic activity.

A second impact, however, is to provide people with services, such as health, education, housing and sanitation. Remittances enable recipients to purchase these services themselves. Foreign private investments will typically result in some local employment and consequently enable employees to acquire these services as well. But only aid directly finances improvements in access to and quality of such public services.

Read the full piece on Devex >>

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Mobilizing Post-2015 Action: Are the SDGs too complicated to be effective?

un flagsEarlier this month, UN Secretary-General Ban Ki-moon released a “synthesis” report to guide the final draft of the Sustainable Development Goals (SDGs), which will replace the Millennium Development Goals (MDGs) when they expire in 2015. Ban’s current draft of the SDGs includes about twice as many goals and eight times as many targets as the MDGs.

UN member states still have time to adjust the next development agenda and it is important that they do, says Dalberg Global Operating Partner Paul Callan in a recent Devex op-ed. ”The MDGs spoke to political leaders and to people around the world; the draft SDGs will speak only to experts and activists,” the op-ed states. He argues that with so many complex parts, the draft SDGs lack the simplicity that enabled the MDGs to create impact.

He writes:

Without denying the achievement of the work to date, it is hard to conclude that the current draft goals comply with the collective declaration of all countries at the Rio+20 Summit.  The Rio+20 outcome document The Future We Want, which launched the Open Working Group, “underscore[d] that sustainable development goals should be action-oriented, concise and easy to communicate, [and] limited in number.”

Leaders will adopt the final set of SDGs at next year’s UNGA. Before then, they need to refocus the goals and reduce dramatically the number of targets. Ideally, the committees drafting the SDGs will concentrate on the most vital issues — poverty, growth, education, health, environmental sustainability — and on the targets that will generate the most impact from investments made.

Read the full piece on Devex >>

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Why “Anti-Poverty” Vaccines Matter, with Dr. Peter Hotez

By Sylvia Warren and Sara Wallace

“Every single person living in extreme poverty is afflicted by at least one neglected tropical disease,” Dr. Peter Hotez of the Sabin Vaccine Institute explained in a recent D. Talk at Dalberg’s DC office.

Though neglected tropical diseases (NTDs) receive less funding and publicity than the “big three” (HIV/AIDS, malaria, and tuberculosis), they have enormous social and economic costs. The group of tropical infections categorized as NTDs cause chronic disability for millions of low-income people around the world.

Vaccines can help lower the prevalence of NTDs and have been shown to prevent not just poverty but also conflict. But for NTDs and other diseases, the path from vaccine idea to delivery is not easy. According to Dr. Hotez, vaccines are “among the most cost-effective and powerful life-saving technologies.” But, he says, they “are also probably the slowest.”

We sat down with Dr. Hotez to detail the key challenges in vaccine development, misperceptions about NTDs, and what the process to deploy an Ebola vaccine might look like. Watch the full interview above.

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Reducing Food Loss and Waste to Feed the World’s Nine Billion People in 2050

By Cecilia Chen, Dan Tuttle, and Dan Zook

One primary driver of food loss is a lack of skills training for actors within the supply chain in handling, packaging, and storing food. Photo by Lon&Quita via Flickr.

One primary driver of food loss is a lack of skills training for actors within the supply chain in handling, packaging, and storing food. Photo by Lon&Quita via Flickr.

The global population is expected to grow from about seven billion today to over nine billion by 2050. Producing enough food for this population will require a 70 percent increase in agricultural production and $83 billion per year of investments in developing country agriculture.

Yet, one third of the food produced globally—about 1.3 billion tons of food per year—is never consumed at all. This food is wasted or lost at some step of the supply chain between when it leaves a farm and when a consumer would typically eat it.

The solution to feeding a growing population is not simply to produce more food, but also to save, preserve, or recycle the food already produced. Cutting current food wastage in half, for example, would yield enough food to feed one billion people—half of the additional population expected by 2050.

The issue of food that is never consumed breaks into two discrete problems: “food loss,” which primarily affects developing countries, and “food waste,” which primarily affects developed countries.

Food loss, which accounts for 90 percent of unconsumed food in developing countries, refers to the decrease in edible food mass during production, postharvest processing, and distribution. The primary drivers of food loss are a lack of skills training for actors within the supply chain in handling, packaging, and storing food; insufficient on-farm storage technologies or postharvest storage facilities; and farmers’ poor market access, which leads to spoilage before products can be sold.

Food waste, on the other hand, refers to food that is fit for human consumption but is discarded by retailers or consumers. In developed countries, high aesthetic standards, stringent food company contracts, large portion sizes, and promotion-driven sales often lead to the overproduction of food, much of which is discarded. Food discarded by the consumer—the last actor in the supply chain—wastes the resources used in every previous step in the chain.

Food Waste and Loss

Unconsumed food also has effects beyond food security, ranging from the economic—one year’s unconsumed food is worth roughly $750 billion—to the environmental—unconsumed food is responsible for 3.3 billion tons in CO2 emissions per year.

Food lost early in the supply chain is particularly devastating for the world’s 470 million smallholder farmers, most of whom live beneath the poverty line. Many of these food producers are also among the 1.2 billion people who are food insecure. As a result of such on-farm losses, farmers are not be able to convert as much of their produce into income. A recent Dalberg analysis estimates that every year 320 million metric tons of food—17 percent of food produced globally—is lost during production and postharvest alone.

From an ecological perspective, food wastage means that valuable natural resources are used to produce food that is ultimately not consumed. Globally, farmers use an amount of land equivalent to all of Africa’s cropland to produce food that is never consumed. Though this food is not used, the environment still pays a price: the production of wasted foods accounts for 10 percent of global greenhouse gasses and depletes a quarter of global freshwater.

Through an assessment of global food loss and waste for the Rockefeller Foundation, Dalberg identified high-potential solutions underway in developing countries to reduce food loss and simultaneously improve farmer incomes. These promising interventions include:

  • Market-based models for low-cost, farm-based storage, preservation, and processing technologies: For example, hermetically sealed bags that preserve the quality of grains, vegetables, and seeds allow farmers to store and sell products later in the season when prices are higher.
  • Large commercial food companies’ expanded operations in emerging markets that bring technology, infrastructure, and management discipline: For example, in an effort to commercialize and formalize its domestic supply chains, Reliance Retail India is investing in its cold chain infrastructure to reduce transport time of fruits and vegetables, thus limiting the possibility of food spoilage in transit.
  • Community investments in on-farm agro-processing solutions: For example, solar dryers can replace open-air drying, which is labor-intensive and leaves fruits and vegetables susceptible to weather and pests. Such dryers can be used in areas without access to electricity to produce export-grade produce. By pooling farmers’ produce, a community can improve its ability to purchase these agro-processing tools.

Agricultural postharvest loss and consumer food waste have wide-ranging consequences, from smallholder farmer livelihoods, to food security and nutrition, to conservation of water and other environmental resources. Reducing loss throughout agricultural supply chains would not only address these concerns, but also tackle fears of future global food shortages and enable scarce resources to be shared more wisely.

As the development community struggles to meet the nutritional demands of a growing population, policymakers should focus not on producing more and more food, but rather on reducing food waste and loss.

This article originally appeared on the Council on Foreign Relations. The research that underpins this article was supported by the Rockefeller Foundation.

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Empowering Individuals as Smart Funders to Take Poverty to “Zero”

By Angela Rastegar Campbell

Angela Rastegar Campbell

Angela Rastegar Campbell

Next week, the US will celebrate Thanksgiving, a holiday focused on giving thanks and giving back. As charitable giving peaks during this upcoming holiday season, one critical cause to give toward is the monumental task of taking poverty to “zero.”

But with 1.2 billion people living in extreme poverty around the world, addressing poverty will require not just more giving, but smarter giving – to organizations with the most effective interventions.

Generations X and Y are prime candidates for smarter giving – those of us ages 19 to 49 are nearly twice as likely as prior generations to focus on understanding the “return on investment” (ROI) of our donations. We want to use impact metrics to ensure our philanthropy is effective, but smart giving can be difficult as an individual. Evaluating nonprofit impact is time and labor-intensive, particularly when many nonprofits do not publically report key metrics. Transparent, data-driven nonprofits such as GiveDirectly and Evidence Action are in the minority. The lack of an efficient flow of information costs the sector billions of dollars per year, from a combination of marketing dollars spent by nonprofits and research dollars spent by large donors.

Enabling individuals to give wisely, however, is critical in the fight against global poverty. Last year, individuals in the US gave over $250 billion (including bequests) – that’s about 80 times more than the Gates Foundation spent.

Since leaving Dalberg earlier this year, I’ve founded a new platform called Agora Fund to help fill the impact information gap and empower individuals as smart funders. Agora Fund enables individual donors to easily fund measurable results by matching them with a customized portfolio of high-impact nonprofits. Our goal is to understand how global development nonprofits are actually alleviating poverty – rather than measuring day-to-day activities like number of food packets distributed – and to connect individuals with the highest-impact nonprofits based on each donor’s unique theory of change. By collaborating with other experts in the sector, such as Innovations for Poverty Action and the Mulago Foundation, we hope to support the global dialogue around outcomes-based measurement.

Agora Fund’s Poverty Portfolio

Drawing on the UN’s Multidimensional Poverty Index and the draft Sustainable Development Goals that will drive the post-2015 development agenda, Agora Fund believes individual philanthropy can address global poverty through three approaches:

  1. Providing services to meet basic human needs, such as health, food, sanitation, and housing,
  2. Enabling access to resources, such as banking and communication, and
  3. Creating economic opportunity through education and training.

We recognize that interventions using these three approaches only work, however, when they are tailored to local contexts. For instance, what works in sanitation for women and girls in Nepal will vary greatly from what works in Ghana, where cultural norms are extremely different.

In addition to providing individuals with customized information on smart giving, Agora Fund also invites individuals to contribute to a “poverty fund” that we’ve curated, which contains high-impact nonprofits addressing poverty around the world through proven interventions. The nonprofits in this fund report that each donated dollar they receive increases income for poor families anywhere from 28% (in the case of cash transfers) to over 250% (in the case of rural development nonprofits) in just one year.

Ultimately, we hope that by empowering both individuals and high-impact nonprofits, Agora Fund can develop a more efficient philanthropic marketplace and advance global welfare. While the task of combating poverty is daunting, a future without poverty is possible. In the words of UN Deputy Secretary-General, Jan Eliasson, “Our generation is the first with the resources and know-how to end extreme poverty and make sustainable development a reality.” Let’s give wisely to bring about that future.

Angela Rastegar Campbell is a Dalberg alumna and the founder and CEO of Agora Fund, a platform that aims to build a more transparent marketplace for charities. This blog was co-authored with Rachael Gan, an Agora Fund advisor and former vice president at Goldman Sachs.

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Filling the Smallholder Household Data Gap: A New Learning Agenda

By CJ Fonzi and Sara Wallace

When Dalberg and the Initiative for Smallholder Finance set out earlier this year to understand the landscape of impact and risk standards in smallholder finance, what we found was complex. It was a labyrinth of standardized metrics, siloed data sets, and nascent new technologies. As a result, we saw that practitioners and donors seeking to create new appropriate financial products for smallholder farmers had little to no data, particularly on the demand side, on which to base their efforts.

In an effort to help the industry take stock of what we do know, we created a smallholder impact literature wiki and built an interactive map of smallholder finance impact and risk assessment tools. Further, in our industry briefing, Smallholder Impact and Risk Metrics: A Labyrinth of Opportunity, we pointed out that while a large amount of data exists, very few metrics initiatives have focused on catalyzing industry growth. Rather, the lion’s share of efforts has sought to help organizations demonstrate their impact or reduce their risk. There is very little shared knowledge about the smallholder clients that many financial service providers want to reach.


Filling this information gap will require new efforts and a shared learning agenda. In recognition of this need, Dalberg recently joined colleagues at Root Capital and the Aspen Network of Development Entrepreneurs to establish a new framework for this next phase of metrics and data collection. We call it “Metrics 3.0.”

Articulating this new vision for shared metrics in Stanford Social Innovation Review, we reflected that while metrics platforms and data collection efforts were once focused on accountability and standardization, future success lies in collecting actionable information that drives shared value creation. We presented four opportunities in which metrics and data collection can drive value at the organizational and ecosystem levels. The fourth opportunity—building a learning agenda—seeks to encourage industry collaboration to establish an actionable evidence base around what works. In most impact sectors, funding for market research, pilot projects, and innovation is scarce. Too often, though, isolated actors with similar goals are trying the same approaches, collecting the same information, and pushing the field a single step forward. Coordinated learning agendas and shared knowledge bases will allow practitioners to repurpose what others have already learned and utilize scarce resources to fill information gaps and drive the entire field forward.

Armed with a Metrics 3.0 state of mind, the Initiative for Smallholder Finance and Dalberg recently released a briefing titled Lending a Hand: How Direct-to-Farmer Finance Providers Reach Smallholders that examines the supply side by looking at over 150 finance providers offering finance directly to smallholder farmers. The briefing introduces four distinct business model archetypes that have been successful to date in reaching smallholder farmers and highlights the common practices and challenges financial providers face as they try to reach smallholder farmers with appropriate financial products. The briefing also identifies key next steps in understanding the business model archetypes, opportunities to share knowledge and blend approaches, and areas ripe for innovation.

The Direct-to-Farmer Finance Innovation Space Playbook that accompanies this briefing was informed by new primary research into the demand side of smallholder lending. The playbook introduces five opportunities for direct-to-farmer finance innovation: 1) In-field efficiency, 2) Agronomic learning, 3) Credit assessment, 4) Portfolio diversification, and 5) Individual motivation. The playbook then explores specific innovations underway in each area and uses new primary data to suggest concrete examples of new products, services, and strategies that financial service providers might employ to better meet the needs of smallholders.

CGAP’s efforts to conduct financial diaries of smallholders and to survey smallholder households will fill key gaps in market knowledge, and it’s exciting to see CGAP join Dalberg, the Initiative for Smallholder Finance, Financial Sector Deepening, and others in taking an active role in this learning agenda. As we collaboratively build this knowledge base, we hope to arm financial institutions with the research necessary to develop better products and processes to meet the financial needs of the world’s 450 million smallholder farmers and their families.

This post originally appeared on CGAP. View the rest of CGAP’s smallholder data series here.

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Top Five Takeaways from My Internship in Impact Investing

By Isaac Gross

Isaac Gross

Isaac Gross

“So what did you learn?” my boss asked me in the final week of my internship.

After a summer of struggling to make well-formatted PowerPoint slides, finding out after my final presentation that a fund track record is actually the fund manager’s track record, and navigating the connectivity challenges of West and Southern Africa, I realized that this final check-in was the first time I had actually reflected on my experience. While my initial response was not nearly this well-structured and succinct, here are the top five things I learned during my internship with D. Capital:

1) People matter

To those of you who have been working in the industry for years, this comes as no surprise. However, for those of us entering finance from non-traditional industries that assumed it was more Microsoft Excel and less interaction, this was a pleasant discovery.

2) Bet the jockey

Again, this may seem obvious to people who have been working in investing for years, but I was shocked to find how important management was to investment decisions. I’m not saying that any of the incredible entrepreneurs I had the pleasure of speaking to this summer could run a successful pager business in 2014, but the conversations I had with them were one of the key components of my investment recommendations.

3) Time is money

Over the summer I worked with a number of extremely impressive and equally busy people. I had to quickly learn that their time and attention was a privilege. After 10 weeks, I became very good at preparing for internal and external interactions so that the discussions I was having were productive.

4) It’s a dance

One of my favorite entrepreneurs from my previous career in public health once told me that fundraising was a like a dance. You had to know when to move in and when to back away. I found this advice useful in my conversations with company leadership and was amazed by how good the partners at my organization were in this regard.

5) Trust yourself

If you are interning at a successful organization, which I’m sure many people reading this blog have done or will do at some point, some extremely impressive person has decided that you have the potential to one day become successful as well. You should operate under this premise. You will make mistakes, as I did, but as long as you learn from them and believe in yourself, things will work out.

This article originally appeared in Wall Street Oasis.

Isaac Gross is a member of the 2015 MBA class at London Business School who interned with D. Capital Partners. Click here to see current opportunities to work within the Dalberg Group.

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Helping youth transition from “learning to earning” to reduce unemployment across African countries

By Elizabeth Eze and Dean Segell

By 2050, the youth population (15-24 year olds) across African countries will doubleoutstripping China and India’s combined youth populations - and comprise nearly 20% of Africa’s working population. These young workers in Africa are also obtaining higher levels of education than in the past. According to African Economic Outlook, 65% of Africans between the ages of 20 and 24 will have at least a secondary school education by 2030, up from 46% in 2010.

Youth participate in a digital literacy class in Namibia. Photo via Flickr by the World Bank.

Youth participate in a digital literacy class in Namibia. Photo by the World Bank via Flickr.

The increase in young, educated labor market entrants coupled with Africa’s growing economies have the potential to drive economic and social development in some of the world’s poorest countries. But in order for this to happen, young people must be able to get jobs. Unfortunately, youth unemployment rates across the continent remain consistently high.

The growing youth population will need to overcome two hurdles to employment if it is to support the continent’s economic upswing: the insufficient number of jobs in the labor market, and their inadequate skills sets to qualify for available jobs.

In short, the youth population needs a roadmap to transition effectively from “learning to earning.” While secondary school education is equipping African youth with basic professional skills and the digital literacy required to operate computers, create spreadsheets, and use the internet effectively, employers report that youth lack the soft skills required to work with clients and to receive instruction from senior management.

ICT-enabled jobs contribute to youth employment and empowerment efforts

One particular area presents an opportunity for young people: ICT-enabled jobs. In recent years, the ICT (information and communication technology) sector has been a large driver of GDP growth in many African countries, primarily due to growth in mobile technology and Internet use on the continent. The ICT sector is also creating jobs in Africa. Businesses are increasingly reliant on technology and the Internet, and thisreliance has created jobs in related services fields that African youth are in a prime position to fill. While young workers may not have a depth of workforce experience, they typically possess digital literacy, making them well-equipped to excel in the jobs that ICT has generated.

Prioritizing outsourcing makes employment sense for youth too: the market for employing socio-economically disadvantaged people in outsourcing centers is currently estimated at $4.5 billion and has the potential to reach $20 billion and employ 750,000 people by 2015. In short, outsourced jobs represent important employment opportunities for the growing number of African youth.

Ensuring youth in Africa are equipped to perform new ICT jobs successfully

Digital Jobs in Africa report Dalberg

New report from Dalberg, supported by the Rockefeller Foundation, explores opportunities for digital jobs to ease youth unemployment in Africa.

Despite rising education among Africa’s youth, the number of employees prepared for ICT-enabled jobs (such as those in outsourcing) still falls short, for two reasons: lack of soft skills and lack of work history.

According to employers, many young people lack the soft skills – for example, the ability to interact effectively with clients and co-workers – needed to succeed in these service-oriented positions.

Additionally, employers see young people as less employable when they have lingered in unemployment. For young people, finding employment in the first year after high school seems to be a particularly important indicator of future employment. Youth in South Africa who remain at their first job for more than a year are 85% more likely to avoid becoming unemployed. Meanwhile, early unemployment tends to set youth on a lower-potential path from the outset. Young people who are unable to find work in their first year will earn 21% less in total lifetime earnings than peers who get jobs in their first year after school.

Reaching youth in that crucial first year after school

These figures suggest that youth development initiatives could reap outsized returns by focusing on the transition year between “learning and earning.” Our colleague, Tania Beard, wrote about one approach to bridging this skills gap: civil service.

Dalberg recently supported a Rockefeller Foundation report, “Digital Jobs in Africa: Catalyzing Inclusive Opportunities for Youth,” that highlighted Harambee, an organization focusing on this key year. Harambee trains young people based on employers’ demands for skills and places them in jobs best aligned with their skills. The South African youth accelerator has delivered above-average retention rates for companies and above-average placement rates for youth seeking jobs.

While new jobs in the ICT sector and youth development programs like Harambee cannot singlehandedly solve the youth unemployment crisis in Africa, they are an important first step in priming the rising number of youth workers for success.

For more on Dalberg’s work with youth development, click here.

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Video: D. Talks – Steve Daniels, Founding Director of Makeshift Magazine, on Design and Global Development

By Cecilia Chen and Hanna Seminario

Below, Steve Daniels, IBM Design Lead and Founding Director of Makeshift magazine, talks hacks, informal economies, and Human-Centered Design with Dalberg Video:

In a recent D. Talk, Steve came to Dalberg’s New York office to discuss the intersection of design and development, and particularly, the nexus of the two in informal economies. He explained that informal economies act as “society’s sandbox” where design solutions develop free from political and institutional constraints. Many of today’s innovative industries first appeared as hacks out of necessity in these informal economies. Long before the creation of ride-sharing companies like Uber and Lyft, dollar vans were operating in Brooklyn, NY. CouchSurfing predated the successful room-sharing website Airbnb, and hackers in Accra fused SIM cards so that they operate from multiple providers at least half a decade before phone manufacturers introduced multi-SIM phones.

These innovations also raise attribution questions. The World Intellectual Property Organization asked Makeshift to research applying intellectual property rights to informal economies in Nairobi. He found that a cluster of metalworkers in Kamukunji has informally enforced the opposite for over half a century: encouraging inventors to share their designs and penalizing those discovered to be hiding inventions.

Steve demonstrated that “informal economies push us to test the way we think, work, and govern.” These unlicensed, unregulated businesses may be the world’s biggest design research opportunity, accounting for two-thirds of global employment and an annual $10 trillion in “GDP.”

So how can we incorporate the innovative thinking of informal economies into our own design process? Steve has developed a course, Disruptive Design for Makeshift Cities, for students in the School of Visual Arts’ Design for Social Innovation program to engage with informal economies around them – including dumpster divers, subway performers, illegal goods for sale on Craigslist – as a source of design opportunities. Through Makeshift’s consulting practice, he focuses on Human Systems Design, considering the needs and capabilities of all stakeholders throughout the design process to create an environment that unlocks their potential.

Working in development, we can only hope for our outputs to receive the same uptake as these innovations developed informally by hackers. Perhaps acknowledging the merits of informal innovation and borrowing from their design process – which focuses on present user needs in a resource-constrained situation – could get us closer to the game-changing products Steve has documented on the ground.

Steve Daniels presented at D. Talks, a forum that convenes the development community in cities where Dalberg offices are located. D. Talks aim to drive dialogue and critical thinking on global development issues and create networking opportunities for development professionals.

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Direct-to-Farmer Finance: Business models for serving the hardest-to-reach smallholders

By Laura Goldman

smallholder farmer Kenya

A smallholder farmer in Kenya. Photo by Elyse Marr.

An estimated 90 percent of smallholder farmers lack strong, consistent relationships with buyers – and the access to finance, inputs, agronomic training and other support that typically accompanies those relationships.

The way these smallholders operate – outside a tight value chain, on a relatively small landholding, and with limited commercial activity – makes it difficult for financial providers to reach them. Direct-to-farmer finance is an important pathway through which these farmers can gain access to credit and other financial services that will help them improve their yields and lives. A new briefing from the Initiative for Smallholder Finance, with research from Dalberg, explores the over 150 finance providers who offer finance directly to smallholder farmers globally.

These “direct-to-farmer finance providers” range from state and agricultural development banks, to informal financial institutions, and everywhere in between. Through our research, we observed that providers’ specific approaches to direct-to-farmer finance cluster around four business model archetypes: Build & Integrate, Build & Partner, Leverage & Network, and Extend & Mobilize.

Understanding the following four archetypes can help funders, investors and finance providers better align models across smallholder farmer segments and identify opportunities to address scaling challenges:

1. Build & Integrate: These financial providers aim to fill a market gap by serving primarily non-commercial smallholders with little to no access to finance and farming-related services. Field-based staff deliver financial products, typically developed specifically to support smallholders’ agricultural needs, as well as agronomic training and other support services. The hands-on and field-based nature of Build & Integrate providers’ approach helps them build strong relationships with smallholders and a deep understanding of their financial and non-financial needs. However, this approach also translates to a low farmer-to-field officer ratio of approximately 100-200 farmers per field officer – the lowest observed across archetypes. One example of a Build & Integrate financial provider is One Acre Fund, which is serving more than 180,000 farmers across Kenya, Tanzania, Burundi and Rwanda.

2. Build & Partner: These financial providers also aim to fill a market gap by serving rural populations, including both non-commercial smallholders and commercial smallholders in loose value chains. Similar to the Build & Integrate model, these providers operate in close proximity to clients, delivering financial products through field-based staff. However, Build & Partner providers typically outsource the development and delivery of agronomic training and other support services through formal partnerships. As providers’ staff operate in the field but are primarily responsible for financial activities only, Build & Partner providers typically have farmer-to-field officer ratios of approximately 300-500 farmers per field officer – higher than those of Build & Integrate providers. Juhudi Kilimo, a non-bank financial institution offering asset financing to Kenyan smallholders, is an example of a Build & Partner financial provider.

3. Leverage & Network: These financial providers use existing infrastructure to broaden their client base by serving commercial smallholders, including some in loose value chains. To do so, providers typically deploy existing capital sources (including revenue, client savings and investment capital) and staff to deliver a full set of financial products to smallholders. Most Leverage & Network providers serve smallholders from branches and seek out informal partnerships with other organizations who that can provide training and other agronomic support to their clients. Given these factors, Leverage & Network providers typically have the highest farmer-to-field officer ratios: more than 1,000 farmers per field officer. Opportunity International and its network of financial institutions offering smallholder finance across seven African countries are examples of Leverage & Network providers.

4. Extend & Mobilize: These financial providers are typically member-run organizations set up to meet the needs of the rural communities in which they operate. Thousands of these providers exist – including Village Savings and Loans Associations (VSLAs) and Savings and Credit Cooperatives (SACCOs) – and some have extended their financial product offerings to include agricultural-focused products for non-commercial smallholders. Most Extend & Mobilize providers depend on their existing staff and capital base (typically member savings) to support their agricultural finance activities. Agronomic supporting services are typically member driven and provided more informally on a volunteer basis.

Taking direct-to-farmer finance to the next level

While each business model archetype has strengths and merit, each also faces significant limitations to scale, as our briefing explores in greater detail.

ISF direct to farmer finance playbook

The Direct-to-Farmer Finance Innovation Spaces Playbook outlines specific opportunities for finance providers to innovate and better serve smallholders.

To overcome these challenges and close the enormous gap that persists between demand for and supply of smallholder finance, finance providers will need to share knowledge and blend approaches across business model archetypes. Funders and investors can encourage this activity by supporting knowledge-sharing platforms and activities among providers, and working with individual direct-to-farmer finance providers to experiment with practices more commonly observed in other business model archetypes.

Funders and investors also can support ongoing and future innovation to help providers overcome challenges and scale more quickly. The Direct-to-Farmer Finance: Innovation Spaces Playbook, the latest publication from the Initiative for Smallholder Finance and Dalberg’s Design Impact Group, describes these innovation opportunities in greater detail and suggest compelling new directions in which practitioners could build off of current activity.

This article originally appeared on NextBillion.

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