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Agricultural Financing 2010

A powerful tool for contributing to the food security of the populations

In developing countries, poverty is a phenomenon concentrated in rural areas, where the vast majority of the farm holdings maintain rudimentary agricultural practices. However, in these countries, agriculture contributes greatly to the nation’s economy in both jobs and GDP.

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This makes agricultural development a priority strategy for the governments of several countries in their struggle against food insecurity and to reduce poverty. Food insecurity and poverty are likewise issues for the international community. They have furthermore contributed to making access by small farmers to adequate financial services one of the most extensively debated issues in the course of the past several decades in the proximity finance sector. The findings on the state of the world at the dawn of the third millennium oblige mankind to tackle simultaneously three colossal struggles related to poverty, environment, and health. Agricultural activity is intimately related to these three struggles since it employs the greater part of the active populations in developing countries, it has a major effect on the ecosystems and the climate (water use, deforestation, pollution) and it has a direct impact on the health of the communities(nutrition and food safety).

“For many of the 1.1 billion people currently living in extreme poverty, economic growth based primarily on agriculture and on non-farm rural activities is essential to improve their livelihoods. The majority of poor people live in rural areas. Promoting agricultural growth in these areas and giving rural people better access to land, water, credit, health, and education, is necessary in order to alleviate poverty and hunger.”

The confirmed role of financial institutions in economic development, by means of the lever represented by financial intermediation, makes natural the growing interest in extending access to such services to the most economically disadvantaged areas in developing countries: rural areas.