Financial Innovation for Smallholder FamiliesWorld Bank BBL, March 19, 2014

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According to a 2013 study, what percentage of adults in Tanzania generate an income from farming activities?

1. 58.8%

2. 62.8%

3. 78.8%

4. 82.8%

5. Why are you asking me questions? I only came for the free food.

According to a 2013 study, what percentage of adults in Tanzania generate an income from farming activities?

31 2 3 4 5

0% 0% 0%0%0%

1. 58.8%

2. 62.8%

3. 78.8%

4. 82.8%

5. Why are you asking me questions? I only came for the free food.

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CGAP Focus

A holistic approach to understanding the wide array of financial services needs of underserved

smallholder families who are not only agricultural producers but also consumers with

diverse sources of income.

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According to a 2008 Zambian study of smallholder farmers (less than 3 hectares), the percentage of household revenue from agriculture is…

1. 23.7%

2. 48.2%

3. 68.5%

4. 84.9%

5. This is just not a question that interests me.

According to a 2008 Zambian study of smallholder farmers (less than 3 hectares), the percentage of household revenue from agriculture is…

61 2 3 4 5

0% 0% 0%0%0%

1. 23.7%

2. 48.2%

3. 68.5%

4. 84.9%

5. This is just not a question that interest me.

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Understanding Demand

“Income diversification is an important risk management strategy that many smallholder farmers pursue and find indispensable for risk management.” (AgFiMS Tanzania 2011).

Only 23.7%

of total household income from ag production

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Understanding Demand: Key Hypothesis

“Emerging from poverty” for smallholder families should be measured not only by increased income from agricultural production but also by diversification of income streams.

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The percentage of smallholder farmers in Mali who consider themselves “trapped” is. . . (Dalberg)

1. 15%2. 25%3. 35% 4. 45%5. Please stop bothering me – I’m

checking e-mail.

The percentage of smallholder farmers in Mali who consider themselves “trapped” is. . . (Dalberg)

101 2 3 4 5

0% 0% 0%0%0%

1. 15%2. 25%3. 35%4. 45% 5. Please stop bothering me

– I’m checking e-mail.

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Understanding Demand

“The needs and preferences of smallholder farmers are not monolithic – there can be large difference in the same country among similarly situated smallholders.” (Dalberg, “Listening to the Farmer Voice” 2011).

28-37% would welcome an alternative

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Understanding Demand: Key Hypothesis

The best investment strategy smallholder farmers can pursue is to invest in other livelihoods or in new skills for their children, as opposed to increase agricultural production.

(Collier, 2012)

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Understanding Demand: Key Hypothesis

Digital financial services are currently too expensive and insufficiently tailored to provide value to smallholder families.

CGAP Workplan: Establishing Demand-Side Evidence Base

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Qualitative Diaries Quantitative Surveys

T1

Financial Instruments

Usage/Mobile Channel

T2

Life History/Aspirations

T3

Agricultural/LivelihoodPlanning

Tanzania

Mozambique

Pakistan

Country 4

Country 5

Country X

90 families per country: 30 one harvest 30 more than one harvest 30 noncommercial

Nationally representative sample size (1000+)

One-Time Survey

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CGAP Workplan: Supporting Supply through Crowdsourcing Innovation

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CGAP Workplan: Supporting Supply through Research on the use of MFS for Smallholder Families

G2P: Nigerian Growth Enhancement Support(GES) Program for Fertilizer Subsidy

Payments: Contract Farming in Ghana

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CGAP Workplan: Supporting Supply through Applied Product Innovation

Savings vehicles do not always result in availability of funds (or usage of such funds even if available) for purposes of buying inputs for the following production cycle. (Duflo, Kremer, Robinson 2011 –Western Kenya.)

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CGAP Advisory Committee for Financial Innovation for Smallholder Families