Finance in the Value Chain Framework

This paper describes value chain finance, and discusses its relevance to value chain development. It also recommends good practices when designing value chain finance interventions. Value chain financing helps the economic sector become more competitive. It helps firms reach critical client groups and aids replication and expansion within the industry. The paper defines value chain financing as financing provided to or by a value chain actor to increase value-chain growth and competitiveness. One example of value chain financing include buyers providing various services for banks interested in lending to affiliated producers. Recommendations for designing value chain financing programs include:

• Design interventions based on value chain analysis;
• Select partners carefully;
• Recognize limits and benefits of financing by value chain actors;
• Focus on economic opportunities.