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World Bank Lessons on Rural Finance
In "Meeting Development
Challenges Renewed
Approaches to Rural Finance" the need for a fresh global financial
infrastructure to meet the challenges of delivering rural finance is
discussed in detail. This 86 page document document reveals both
challenges and potential solutions. Wel-Fi is designed as an answer to
issues faced over the last 60 years.
Selected quotes from the Executive Summary considered to be supportive of
the need for Wel-Fi.
There is a
need to address the lack of financial services
in the rural
areas of most countries head-on.
The time has
passed to just add credit lines and a bit
of technical
assistance to rural and multi-sector
projects and
expect that this will result in the sustainable
provision of
financial services to rural
households
and enterprises.
…there
are very few standalone
rural
finance projects that aim to increase
access
to financial services on a comprehensive
basis.
Most
rural finance projects are components
of
larger projects and contribute to the solution of
specific, narrowly defined problems, mostly credit
for
project target groups through the provision of
credit lines.
Within the
context of this paper, rural finance is
the
provision of financial services such as savings,
credit,
payments and insurance to rural populations
by
organizations that exist along a
continuum
from formal
to
informal, ranging from commercial
banks to informal village-based savings groups.
This
includes
financing for agriculture, agro-processing
and other
rural enterprises, from part-time income
generating
activities to full-time micro-enterprises to
small and
medium size (SME) enterprises.
Access to
financial services is
only one of
the factors influencing rural economic
development.
For example, access to quality agricultural
inputs,
access to agricultural extension
services,
access to markets and market information,
and access
to physical and communication
infrastructure are all important, and should be
investigated
as complementary measures in order
to achieve best results.
In many
countries, one of the biggest problems
in rural
finance is that there are not a sufficient
number of
financial institutions operating in rural
areas, or
there are not enough institutions serving
low-income
customers and farmers.
Institution-building measures would include
technical
assistance to help financial institutions
develop
appropriate products, systems, and service
delivery
strategies that would enable them to profitably
serve a
rural clientele. Although this approach
can be
easily formulated, the challenges are quite
significant,
as capacity building often requires a
long time
frame. Significant outreach results should
not be
expected quickly, as it takes time to build
strong
structures and systems.
Unless these
arrangements are designed from the
beginning to
link clients to existing financial intermediaries
or to
develop these structures into viable
financial
intermediaries, with the appropriate assistance
for
institution-building, sustainability cannot
be achieved
and rural populations will be left once
again
without financial services after the project
ends.
You can download this informative report
by
clicking here. |
