More than three quarters of the world’s poor reside in rural areas of developing countries. At the same time, it is these countries where the biggest population growth is forecast. To feed this growing population, developing countries will need to almost double their food production.
There are 500 million smallholder farms world-wide, more than 2 billion people depend on them for their livelihood. Small farms produce around 80 % of the food consumed in Sub-Saharan African and Asia. Enhanced smallholder agriculture can offer a route out of poverty for rural populations while increasing food security. But it needs to be productive, commercially viable and linked to markets – and environmentally sustainable. Yet, smallholder agriculture will not provide a route out of poverty for all rural people. The non-farm economy, too, can provide opportunity and income.
Women play a critical role in running rural households and make major contributions to agricultural production. They typically work 12 more weekly hours than men. Where men have migrated in search of work, women often have the sole responsibility for farming and raising the children. Yet they have less access to resources and services to earn income and increase their productivity.
Slowing the rural exodus, promoting economic growth and reducing rural poverty requires a broad approach, based on a deep understanding of the local economies and communal ties. For long-term impact, the rural economies need continuous funding in combination with capacity building to improve the capability of the borrowers to pay back their loans and improve their living conditions. Rural dwellers need to be able to borrow, save, invest and protect their families against risk. But with little income or collateral, poor people, especially women, are barred from access to loans from banks and other formal financial institutions. And to those willing to bridge the gap, challenges abound : infrastructure is scarce or non-existent in rural areas, clients are far flung, transaction costs are high, and the agricultural yields can fluctuate depending on uncontrollable factors.
ECLOF addresses these issues through locally-rooted financial and non-financial services to rural dwellers and farmers. More than half of ECLOF’s clients world-wide are located in rural areas, and one quarter of the loan portfolio is dedicated to agricultural loans. ECLOF offers tailored products and services that are accessible to clients at the bottom of the pyramid, help them build capacities and increase yields through training and market linkages and reduce risks through micro insurance and emergency loans. Hereby ECLOF empowers in particular youth and women.
The following examples illustrate how ECLOF bridges the rural and agricultural funding gap with innovative approaches, promotes sustainable agricultural practices and empowers the local communities by bringing them together and building their capacity.