Value Chains and their Significance for Addresing the Rural Finance Challenge

This concept paper addresses challenges and gaps in rural financial markets, and discusses ways by which these challenges can be met. The paper provides examples of specific interventions that may be considered in designing programs and promoting a range of financial products and services. The document presents:

• A summary of present challenges involved in rural financial services;
• Gaps in rural financial markets and factors responsible for them;
• An explanation of value chain financing;
• Different types of value chain financial products and mechanisms involved in the delivery of these products;
• Benefits and limitations of value chain financing and financial products. 
• The role of value chain actors, compared to financial institutions.

Finally, it discusses:

• Policy implementation and enabling environment;
• Cost-effective approaches for the program;
• Program design and value chain analysis;
• Learnings from the research.