World Bank launches financial scheme for slowdown-hit farmers

The World Bank, armed with a $20-million grant from Bill & Milinda Gates Foundation, today announced to launch a financial scheme for helping farmers hit by the economic crisis in developing nations, including India.     

In a time of tight credit, the facility will support grants to bank and non-bank institutions for activities to increase access to financial services, such as savings, credit, payments and insurance, in rural areas in developing countries as profitable business lines, the World Bank said in a statement.     

"We need to ensure sustainable access to financial services as a fundamental way to reduce poverty," said Renate Kloeppinger-Todd, Rural Finance Adviser at the World Bank.     

"The Facility will enable financial institutions to provide new opportunities for smallholder farmers to make productivity enhancing investments and to use new technology and services," he said.     

In India, a country with relatively high rural banking outreach, 45 per cent of smallholder farmers did not have a savings account, and 69 per cent did not have a credit account with formal financial institutions, the bank said.

Survey data from Honduras, Nicaragua, and Peru show that nearly 40 per cent of agricultural producers are credit-constrained. The level of access in Africa is much lower. Less than one per cent of farmers in Zambia and less than two per cent of the rural population in Nigeria have access to credit from formal institutions.     

Even before the financial crisis, most of the over one billion smallholder farmers worldwide and many of the rural entrepreneurs of the developing world had little to no access to financial services. Since the financial crisis, access to these needed services has become even more strained.     

"There is a great need among smallholder farmers, who make up the bulk of the world's poor, for ways to save and manage their money," said Carlos Cuevas, Deputy Director of Financial Services for the Poor for the Bill & Melinda Gates Foundation.     

"Having access to safe and reliable financial services such as savings, credit and insurance, allows poor farmers to safeguard cash,  which they often receive only once a year during harvest. In this way, they can better provide for their families, prepare for emergencies, and build long term financial security," Cuevas said.