Sources of Funding and Support System for Value Chain Finance: Lessons from Asia

This paper analyzes sources of funding and support systems for agricultural value chain finance in Asia and presents a comparative analysis of various approaches for financing. It highlights the role of funding in promoting value chains to enhance their competitiveness. The paper analyzes case studies and best practices, and develops a conceptual framework of conditions in which a typical approach works.The paper uses Asian experiences to examine implications for value chain finance in Africa. It concludes with the roles that various stakeholders should play to develop an effective value chain to promote export competitiveness. The paper also examines peripheral issues that should be considered to ensure efficacy of agricultural value chain finance such as risk management and role of mobile money. Recommendations highlight the importance of:

• Governments as facilitators;
• Integrating finance suppliers into value chains;
• Affordable, flexible, and accessible financing products design and implementation;
• Structured technical assistance and capacity building programs for small-scale producers;
• Market linkages for both forward and backward needs of the value chain;
• Enhancing information systems;
• Enhancing cooperation at the producers level through cooperative movements;
• Mobile money in agriculture value chains.