Internal Operational Challenges around Rural and Agricultural Finance
This Field Brief No. 17 discusses the internal operational challenges of implementing rural and agricultural finance (RAF) in Sub-Saharan Africa (SSA). It reviews the decision-making challenges faced by Opportunity Internationals Malawi rural and agricultural finance pilot project that was introduced in five countries in SSA in 2009. The Brief highlights the need to assess the countrys economic and political environment, the value chain, MFIs' operational capacity, and do a cost-benefit analysis before entering into RAF. An MFI faces another set of decisions and issues impacting internal operations, once it decides to enter RAF. These issues occur in the areas of human resources, the agriculture team, operations, risk, marketing and outreach. Challenges include:
- Loan officer recruitment and training;
- Implementing different loan monitoring activities;
- Designing products that match the seasonality of crops;
- Establishing different back-office processes.
The Brief concludes that the challenges imposed by RAF require the concerted effort of all portions of the bank. It recommends that the whole core management team be committed to institutionalizing these new capabilities into bank staff and systems.
