Rural finance – The key to development in rural regions

The overwhelming majority of the world's poor live in rural regions.  The economic development of such regions is one of the keys to reducing global poverty.  One of the main criteria in this regard are financial services that take account of the needs of farmers and small agricultural businesses as well as non-agricultural occupations such as traders and manufacturers.

The SDC's focus

The SDC promotes innovative approaches and projects for the development of an inclusive rural finance system that supports both agricultural and non-agricultural activities with appropriate financial services, such as savings, credit, payment transactions and insurance.  The SDC capitalises on synergies with other rural development measures which promote quality, productivity and the marketing of agricultural products, for example.  The main focus is on:

  • Support for economically viable, client-centric financial institutions and structures in rural regions, including savings and credit unions or co-operatives, alliances between informal and formal financial institutions, full-service banks with a presence in rural areas, or new types of rural development banks, etc.
  • Promotion of education and training in finance at all levels – customers, employers, management as well as control and supervisory bodies of financial institutions
  • Promotion of innovation, such as new financial products and services, for farmers as well as agricultural and non-agricultural businesses
  • Promotion of favourable political and legal frameworks

Background

Despite the important economic role played by rural regions, they generally suffer from a distinct lack of financial services.  Financial services for farmers, agricultural and non-agricultural businesses are either non-existent or inadequate and very expensive.

Rural and urban regions need different financial services. In rural areas, credit requirements are of a medium to long-term nature; loans carry more risk for financial institutions and frequently entail significantly higher transaction costs. 

Current challenges

The development of rural financial systems entails a range of specific challenges.  These include low population density and low economic activity, high transaction costs due to deficient infrastructures (roads, telecommunications) or insufficient population and land tenure records, a lack of qualified personnel in financial institutions as a result of the low education level, specific agricultural risks, such as fluctuating precipitation, pest outbreaks and disease, and price fluctuations.

Current projects

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Supporting livestock traceability in the South Caucasus

The image shows a close-up of a calf with an identification tag in its right ear.

15.06.2016 - 31.12.2021

Identifying where animals have come from and recording information about their health is essential in modern agriculture to prevent the spread of diseases and stop products from diseased animals reaching the market. A system to ensure traceability will help to improve the incomes of farmers in the South Caucasus by increasing both herd productivity and the producers’ access to markets.

Country/region Topic Period Budget
South Caucasus
Agriculture & food security
Agriculture value-chain development (til 2016)

15.06.2016 - 31.12.2021


CHF 5'935'000



Farmers displaced by the conflict acquire a business perspective

Market scene in Darfur in Sudan.

01.04.2016 - 31.12.2017

For over 13 years, devastating conflict has dominated Sudan, forcing the population to flee the fighting and destroying their livelihoods in the process. The SDC supports a UN reconstruction programme in Sudan, which among other things aims to improve the economic situation of smallholder farmers.

Country/region Topic Period Budget
Sudan
Humanitarian Assistance & DRR
Agriculture & food security
Reconstruction and rehabilitation (till 2016)
Agriculture value-chain development (til 2016)

01.04.2016 - 31.12.2017


CHF 1'000'000



IFAD: International Fund for Agricultural Development – Core Contribution

01.01.2016 - 31.12.2018

The International Fund for Agricultural Development (IFAD) is a specialised agency of the United Nations mandated to enable poor rural women and men to improve their food security and nutrition, raise their incomes and strengthen their resilience. Its mandate therefore dovetails with the priorities of Switzerland's development policy.

Topic Period Budget
Agriculture & food security
Climate change and environment
Agricultural development
Agriculture value-chain development (til 2016)
Environmental policy

01.01.2016 - 31.12.2018


CHF 45'087'000



Appui aux économies locales des collectivités de Youwarou et de Niafunké. Programme de Soutien aux Economies Locales du Delta intérieur du Niger

01.07.2015 - 31.12.2020

Dans les régions du delta intérieur du Niger, au centre et au Nord du Mali, les populations rurales sont confrontées à des crises structurelles multiformes dont l’insécurité alimentaire. La DDC appuie les autorités locales avec des projets économiques dans les filières agricoles porteuses pour assurer la sécurité alimentaire et réduire la pauvreté d’au moins 150'000 personnes. En plus, elle accompagne les municipalités de cette zone dans la maitrise d’ouvrage du développement territorial et la gestion pacifique des ressources naturelles.

Country/region Topic Period Budget
Mali
Agriculture & food security
Governance
Climate change and environment
Agriculture value-chain development (til 2016)
Decentralisation
Environmental policy

01.07.2015 - 31.12.2020


CHF 9'445'000



Livestock Development in the South of Armenia

Armenian Farmer with his calf

01.09.2014 - 31.08.2020

In the provinces of Syunik and Vayots Dzor in southern Armenia, the agricultural sector mostly comprises subsistence farming where farmers are barely able to support their households. This project aims to help farmers increase their milk and meat production, and thus their incomes, by supporting local veterinary services (to improve animal health), facilitating access to milk and meat markets, and promoting the sharing of know-how among farmers.

Country/region Topic Period Budget
Armenia
Agriculture & food security
Employment & economic development
Agriculture value-chain development (til 2016)
SME development
Agricultural development

01.09.2014 - 31.08.2020


CHF 10'000'000



Thin lines that change lives

Women carrying baskets walk on a trail bridge.

01.08.2014 - 30.11.2019

In Nepal, trail bridges are vital for rural mobility. Almost 80 of them were severely damaged or destroyed during the earthquakes of 2015, jeopardizing access to education, health services and local markets for thousands of inhabitants in the mountainous regions. The SDC joined the reconstruction efforts, basing its intervention on the long-standing expertise it has in the country. 

Country/region Topic Period Budget
Nepal
Agriculture & food security
Rural infrastructure (till 2016)
Agriculture value-chain development (til 2016)

01.08.2014 - 30.11.2019


CHF 10'998'000



Programme d’Appui à la Formation Professionnelle

01.01.2014 - 31.12.2019

Le marché du travail au Mali est caractérisé par une main d’œuvre peu qualifiée. Dans ce contexte, 300'000 jeunes arrivent chaque année sur ce marché sans compétences. L’offre de formation par domaine et/ou filière est en deçà des attentes du secteur productif. La formation professionnelle e 40'000 personnes dont 50% de femmes à l’horizon 2017, améliore la qualité des ouvrages et augmente la compétitivité des entreprises en contribuant à l’augmentation des revenus dans les régions prioritaires de la DDC et de la coopération danoise.

Country/region Topic Period Budget
Mali
Vocational training
Employment & economic development
Agriculture & food security
Education
Vocational training
Employment creation
Advanced professional training
Agriculture value-chain development (til 2016)
Education facilities and training

01.01.2014 - 31.12.2019


CHF 16'957'000



Contribution aux programmes d’investissement des collectivités territoriales pour le développement régional et local au Mali

01.10.2013 - 31.03.2019

Région la plus arrosée du Mali, Sikasso peine à assurer son rôle de grenier du pays. Le Conseil régional de Sikasso (CRS), avec l’aide de la DDC, veut surmonter ce paradoxe par un programme de coordination du développement local et de valorisation des potentialités agropastorales. Pour ce faire, elle entend renforcer le CRS dans la mise-en-œuvre du volet agro-pastoral de son plan stratégique de développement économique régional.

Country/region Topic Period Budget
Mali
Agriculture & food security
Governance
Agriculture value-chain development (til 2016)
Decentralisation
Rural infrastructure (till 2016)

01.10.2013 - 31.03.2019


CHF 5'300'000



No quick fixes: building Somalia’s ability to handle and overcome crises

Somali man carrying a bale of hay on his shoulders.

01.08.2013 - 30.04.2016

With the aim of improving the living conditions of the most vulnerable populations in Somalia, SDC is contributing CHF 6 million to the three-year Resilience Programme of the United Nations Food and Agriculture Organization, which forms part of the FAO’s overall Somalia programme. With innovative monitoring instruments, risk mitigation measures and through close partnerships, the programme paves the way for a transition from humanitarian interventions to sustainable development in large parts of Somalia, including in the south-central region where humanitarian access to the population in need is highly limited.

Country/region Topic Period Budget
Somalia
Agriculture & food security
Humanitarian Assistance & DRR
Agricultural development
Agriculture value-chain development (til 2016)
Emergency food assistance

01.08.2013 - 30.04.2016


CHF 7'500'000



IFAD: International Fund for Agricultural Development – Core Contribution

01.01.2013 - 31.12.2015

The International Fund for Agricultural Development (IFAD) is a specialised agency of the United Nations mandated to enable poor rural women and men to improve their food security and nutrition, raise their incomes and strengthen their resilience. Its mandate therefore dovetails with the priorities of Switzerland's development policy.

Topic Period Budget
Agriculture & food security
Agricultural development
Agriculture value-chain development (til 2016)

01.01.2013 - 31.12.2015


CHF 28'500'000



Pasturelands - Mongolia's "Green Gold"

Mounted Mongolian herdsman leading his flock of sheep through snow-covered plains.

01.01.2013 - 31.12.2016

One third of Mongolia’s population, which is dependent on herding for survival, is faced with the problem of overgrazing. Empowering herders to collectively manage grazing resources is one of the main objectives of the Green Gold project, dedicated to the preservation of grazing areas, which are the green gold of Mongolia. The project improves the income of 100,000 semi-nomadic herder families.

Country/region Topic Period Budget
Mongolia
Agriculture & food security
Other
Agricultural development
Agricultural services & market
Agricultural research
Agriculture value-chain development (til 2016)

01.01.2013 - 31.12.2016


CHF 10'580'000



Modernising vocational education and training related to agriculture in Georgia

The image shows the VET college student Medea getting hands-on instructions in the Senaki College greenhouse on growing vegetables.

01.01.2013 - 31.12.2018

Georgia’s vocational education and training (VET) system does not correspond to the needs of the transition to a market economy which the government has sought to bring about since the country gained its independence. The SDC is helping the Georgian government to develop a more modern VET system that integrates theory and practice and allows a long-term increase in farm productivity and rural incomes.

Country/region Topic Period Budget
Georgia
Agriculture & food security
Vocational training
Employment & economic development
Agricultural development
Agricultural services & market
Vocational training
Agriculture value-chain development (til 2016)
SME development

01.01.2013 - 31.12.2018


CHF 6'547'000


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