Overview
This project has offered valuable insights into enhancing access to finance for smallholders and marginalised Southeast Asian actors. Although the pilots varied in success, they highlighted key lessons for developing better Agricultural Value Chain Financing (AVCF) products:
While technology can lower transaction costs, it has limitations. For example, automated credit scoring in Myanmar failed to predict defaults, whereas farmers preferred personal interactions for loan marketing in Vietnam.
Farmers may overlook investment opportunities from a macro perspective, but this doesn't guarantee demand for finance. Financial products must be appealing regarding interest rates, payment options, and familiarity to stimulate demand, as seen in Indonesia and Vietnam.
Strong connections between financial institutions and off-takers are crucial for effective AVCF. Off-takers need to be dominant buyers with robust business positions.
Agricultural and finance policies significantly shape AVCF opportunities. Engaging with agri-food companies to understand their needs can uncover new opportunities, whether in enhancing productivity through key inputs or improving product quality for efficient capital use.
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