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New Pathways to Prosperity Report Introduces Tools to Bridge the Persistent Rural Agricultural Financing Gap

ISF Advisors and the Mastercard Foundation’s Rural and Agricultural Finance Learning Lab (the Lab) — both initiatives currently housed at Global Development Incubator (GDI) — have released their latest rural and agricultural finance state of the sector report: Pathways to Prosperity. This report is a follow-up to the 2016 publication, Inflection Point: Unlocking growth in the era of farmer finance. Like that earlier report, Pathways to Prosperity identifies agenda-defining priorities that the sector must address to bridge the persistent finance gap for smallholder households and agricultural SMEs. 

In this latest report, ISF Advisors and the Lab present updated data on the size and scope of the rural agricultural finance market. Among other findings: Despite significant progress in the sector, financial service providers are still unable to meet the full USD 240 billion demand of smallholder households for agricultural and non-agricultural finance. The latest data suggests that providers are currently supplying approximately USD 70 billion. This leaves around USD 170 billion (or 70%) of the global demand for smallholder finance unmet. There is also a large gap in lending to agricultural SMEs that play a crucial role in rural economies. In sub-Saharan Africa alone, the lending gap to agricultural SMEs is around USD 100 billion annually. 

“The new market sizing numbers make it clear that despite significant progress in the sector we still have a long way to go in bridging the rural finance gap. This gap affects smallholder households and agricultural SMEs and cuts across all geographic regions and financing types.”

– Mikael Clason Hook, Director of the Lab

To better meet this pressing need, Pathways to Prosperity introduces new models for navigating an increasingly sophisticated rural agricultural finance market, including: 

  1. A rural pathways model that will move the sector from a static understanding of rural household to a more dynamic view of how households and their needs may evolve over time; and
  2. A new service delivery model typology that reflects the dramatic changes in service provision in recent years, and allows us to better analyze differences, challenges, and opportunities for specific financial service providers. 

When combined, the frameworks in this report offer a number of transformative applications. At the micro-level, the rural pathways model and service provider segmentation can help determine what type of providers are best suited to serve different client segments, and shed light on the elusive impact-return tradeoff. By bringing together the frameworks into a series of integrated impact-investment theses, this research hopes to drive more efficient capital allocation and smarter subsidy that can achieve particular impact and financial returns. At the macro-level, the rural pathways model can also be a powerful tool for considering the current shape of a given rural economy and inform tough decisions about where and how to invest in rural transformation. 

“The rural pathways model provides a step-change in our understanding of the practical livelihood choices available to rural households, a perspective that can fundamentally change how we think about service provision and rural transformation”

– Matt Shakhovskoy, ISF Senior Advisor

In publishing Pathways to Prosperity, our hope is that this research will contribute to unlocking the benefits of financial inclusion for the 2.5 billion people who depend on agriculture for their livelihoods worldwide and support a new conversation about inclusive rural transformation. 

Read the report at

The Global Development Incubator (GDI) builds startups and partnerships to address some of the world’s toughest global development challenges. We provide strategic guidance and implementation support to get high-potential social impact ideas off the ground over 12-36 months. Throughout each stage of our process, we bring together the right partners across sectors – including corporations, nonprofits, governments, and foundations – to help new initiatives scale their impact and prepare for long-term success. Above all, we turn talk into action by matching ambitious leaders, strong concepts, and funding with the executional power required to launch and scale social impact efforts.

ISF Advisors (formerly the Initiative for Smallholder Finance) is an advisory group committed to transforming rural economies by delivering partnerships and investment structures that promote financial inclusion for rural enterprises and smallholder farmers. ISF combines industry-leading research with hands-on technical expertise to develop practical, profitable, and sustainable financial solutions.

The Mastercard Foundation Rural and Agricultural Finance Learning Lab (the Lab) is a seven-year initiative jointly implemented by GDI and Dalberg Advisors. The Lab aims to foster learning and collaboration among foundation partners as well as the broader community. To do this, the Lab leads independent research and supports foundation partners to drive innovation and scale-up of financial services for smallholder and rural customers. The Lab also researches key questions on client demand, financial solution provision, ecosystem development, and impact.