Developing countries’ own financial sector can support blended finance arrangements

A forthcoming CTA report discusses what Central Banks are already doing, and what they can do to achieve greater leverage.

Much of the formal sector finance for agriculture in developing countries comes from these countries’ own public bodies, through state banks, guarantee facilities and the like. However, particularly in Africa there are sound opportunities for Central Banks to play a more deliberate role in agricultural finance, and in particular, to introduce and expand facilities that will crowd in private sector funding (from local sources –banks and investors– as well as international ones). A forthcoming CTA report (Hans Balyamujura, Global Best Practices in Central Bank Support Programmes for Agricultural Value Chain Finance (including warehouse receipt finance) sets out the issues. The report highlights how critical Central Bank support for agricultural finance has been for the development of agriculture in western countries, and how it remains of major importance in Asia and Latin America. The report reviews policies and practices in Brazil, India and Pakistan, and compares this with what has been done by the Central Banks of Kenya, Nigeria and Uganda. It then sets out a new approach to the Central Banks’ roles, and how proactive measures can help bring funds to farmers.

Lamon Rutten,
Programme Manager,
Technical Centre for Agricultural and Rural Cooperation (CTA)