Clinic where you can establish credit health status of your SME

In Summary

Credit information sharing has been changing the lending market with financial institutions sharing both positive and negative records of potential borrowers.

The plan by Metropol is expected to cut the time spent in loan appraisal for small businesses, which quite often, involves home visits and chattel registrations.

Without credit, the process would slow on every level, causing temporary shortages and, worse, labour problems when workers would have to be laid off until money was available to resume business.

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Weak links hamper knowledge sharing in agriculture

Agricultural systems are changing. They need knowledge networks, not independent brokers, says Benjamin Kwasi Addom.

Agricultural extension services are part of most countries’ rural administrative structure, helping to deliver information and development projects. For decades, they have taken on an intermediary role within the networks of organisations and individuals creating and managing new agricultural resources — loosely called agricultural innovation systems (AIS).

Agricultural extension agents routinely communicate researchers’ new knowledge and innovations to farmers to help improve agricultural production. In essence, they have been knowledge brokers — mediating between those who produce knowledge and those who need it, and sometimes repackaging or adding value to existing knowledge on specific topics.

But AIS are becoming more complex: agricultural processes and stakeholder demands are changing and information technologies are becoming more prominent. This has brought new challenges, such as rising costs, widening the gap between those who have new knowledge and those who need it.

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Study set to harmonise mobile cash transfer fees in East Africa

The central banks of four East African countries are conducting a study that will set the baseline for money transfer fees across the region.

Heads of state in Uganda, Kenya, Rwanda and South Sudan in a June directive ordered individual bank regulators to study money flows in mobile platforms and state how harmonisation of the rates could affect the flow.

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Three out of every four poor people in developing countries live in rural areas, and most of them depend directly or indirectly on agriculture for their livelihoods, with an estimated 1.5 billion people living in rural households engaged in smallholder farming and who are still paid in cash, according to a recent report. Consequently, agriculture is a cornerstone of economic growth and the UN’s Sustainable Development Goals (SDGs) that call for governments worldwide to deliver food security for urban and rural poor alike. However, smallholder farmers face particularly difficult challenges, including extremely limited or a total absence of financial services. This lack of financing, paired with the low productivity that has historically affected the agriculture sector in many developing economies, creates an opportunity for innovation and the use of mobile technology to improve multiple components of the agricultural value chain, including but not limited to insurance (the topic of a recent Mondato Insight), inputs, mechanization, extension, aggregation and marketing. The mobile channel holds open the possibility not just of offering previously financially excluded farmers access to financial services (occasionally referred to as mAgriFin), but also of a revolution in the agricultural value chain that could have profound positive benefits for billions of base of the pyramid farmers and consumers.

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What Africa can learn from China about growing its agribusiness sector

The World Bank projects that agriculture and agribusiness in Africa will grow to be a US$1 trillion industry in Africa by 2030. To promote this outcome, the continent must review its incentive structures.

Agriculture averages 24% of GDP across the continent. With post-harvest activities taken into account, agriculture-related industry accounts for nearly half of all economic activity in sub-Saharan Africa.

The region holds about half of the world’s fertile and as-yet-unused land – and yet it spends US$25 billion annually importing food. It also uses only a tiny percentage of its renewable water resources.

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Kenya and IFAD join with development partners to enhance cereal production in semi-arid counties

Rome, 26 August 2015 – Today, the Republic of Kenya and the United Nations International Fund for Agricultural Development (IFAD) signed an agreement to finance the Kenya Cereal Enhancement Programme – Climate-Resilient Agricultural Livelihoods Window (KCEP-CRAL).

Ten thousand smallholder farmers, including women-headed households and young people whose livelihoods depend on maize, sorghum, millet and associated pulses living in eight eastern and coastal semi-arid counties of Embu, Tharaka Nithi, Kitui, Machakos, Makueni, Taita Taveta, Kwale and Kilifi will benefit from this programme.

The programme funding comprises a US$61.8 million loan, a $10 million grant from IFAD’s Adaptation for Smallholder Agriculture Programme (ASAP) and an additional $2 million grant from the Food and Agriculture Organization of the United Nations (FAO) for capacity-building and agricultural services for farming communities.

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 How We Can Improve Ultra-Poor ‘Graduation’: The next generation of innovations required to end the most extreme poverty

There is no great innovation without skepticism, much less in the tireless crusade against global poverty. Currently gaining ground as a viable path out of extreme poverty, the ultra-poor ‘graduation’ approach pioneered by Bangladesh-born global non-governmental organization BRAC is no exception.

In 2002, BRAC (where the author works as a Program Manager) began piloting the Targeting the Ultra-Poor program (TUP). The two-year intervention consists of consumption support, asset transfer, rigorous training, access to services, and regular supervision and monitoring for some of the country’s poorest individuals. Evaluations demonstrated that 95 percent of participants not only improved their economic welfare through increased income from livelihood-generating activities and access to savings and social services, among other factors, but also continued that upward trajectory after “graduating” from the program. It was clear that as a response to re-engaging the poorest of the global poor, the ultra-poor graduation approach was tremendously effective in Bangladesh.

By 2010, the Ford Foundation and the World Bank’s Consultive Group to Assist the Poor (CGAP) set out to determine whether the model could be translated and replicated across varied geographic, cultural and systemic contexts with governments, NGOs and financial institutions collaborating at various levels to implement ten pilots in eight countries. Recently, the results of six randomized control trials (RCTs) done one year after completion (three years after initiation) in Ethiopia, Ghana, Haiti, Honduras, India and Peru have underscored at least one very clear finding: the graduation approach works. And it works across contexts.

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Why climate talks need to focus on agriculture

Other sectors often dominate discussions, but climate-smart farming offers potent solutions, says Frank Rijsberman.

Negotiators at the Paris climate talks in December (COP 21) will focus on reaching a truly universal and legally binding agreement to drive the world’s transition towards resilient, low-carbon societies and economies. This is being talked about as humanity’s last chance to avoid truly disastrous effects for our planet — the floods in the Philippines and persistent drought  in Thailand are just two current examples of the types of events that climate change makes more likely.

In parallel, the scientific community’s focus will be on using and creating practical solutions to complex climate challenges. This week, scientists are gathering in France for a conference hosted by UNESCO (the UN Educational, Scientific and Cultural Organization) to debate evidence-based solutions.

Agricultural scientists are getting organised to increase their involvement in such climate meetings, which the energy and transport sectors often dominate.

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The Key to Fighting Poverty in Africa: Could unlocking smallholder finance solve both the continent’s food and employment challenges?

Social lenders such as Root Capital have pioneered financing for smallholder producers of export crops like coffee, cocoa and tea. Now, Root is seeking to help build agricultural businesses that serve local staple crop markets as well – a financing market that may be 10 times as big.

Root, together with Germany’s KfW Development Bank and agriculture impact investor AgDevCo, recently announced the Lending for African Farming Company (LAFCo), a $15 million facility to provide working capital loans to the small and mid-sized businesses that supply and buy from Africa’s smallholder farmers.

“It may still take another decade before it’s at the point where commercial capital flows in significant volumes,” said Chris Isaac, AgDevCo’s investment director. “Blended finance structures like this, managed by investment professionals, can help bring in more capital earlier which will have a massive developmental payoff.”

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Consultation on how to improve SMEs’ access to finance through better public credit guarantee schemes

Small and medium-sized enterprises (SMEs) play a major role in most economies, particularly in developing countries. However, more than 50 percent of SMEs lack access to finance. Without it, many SMEs languish and stagnate. Credit markets for SMEs often don’t work.

A common form of intervention to improve access to finance for SMEs is a public credit guarantee scheme (CGS).

Credit guarantee schemes provide third-party credit risk mitigation to lenders by absorbing a portion of the losses on the loans made to SMEs in case of default, in return for a fee. CGS are popular partly because they combine a subsidy element with market-based arrangements for credit allocation. This allows less room for distortions in credit markets, unlike more direct forms of intervention, such as state-owned banks.

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