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Global Forum on Food Security and Nutrition • FSN Forum

Re: Eradicating extreme poverty: what is the role of agriculture?

Getaneh Gobezie
Getaneh GobezieconsultantEthiopia

Dear colleagues, the microfinance sector is increasingly proving an effective way to reaching the very poor, and erradicating extreme poverty in a sustaineble way in many developing countries of Asia, Latine America and Africa. It opens access to small capital to the poor, even the very poor with no conventional materal collateral. In this way it facilitates the use of modern agricultural technologies that enhance producion and productivity. ... This is not limited to just available ''external resources'' in terms of credit to the poor. Better suited microfinance services also facilitates better financial management among the poor. Especially, such services can help the poor through modern ways of savings -- providing secure, convinient saving facilities where the poor can store extra income (whenever it is availabe) and availing it for use when it is needed. The poor can thus use such resources as need, for consumption, investment, meet emerhgenices, etc. 

Indeed, there are growing evidences that the poor can finance most of their consumption and investment requirements from their own resources (without external credit!!) if suitable saving facilities are available... One example from Kenya (but there are many such cases recently) -- The biggest difficulty farmers adopting new technologies faced was not in ‘understanding’ the methods and their benefits, but in timing savings in order to purchase the fertilizer when they needed it. When financial tools were provided that solved this problem – cash proceeds collected from farmers at ‘time of crop sale’ and put in a ‘commitment saving’ account at a local bank -- fertilizer use and production increased.

The value attached to availability of flexible saving facilities is even greater by women, for whom secret accumulation of resources in a secure place provide additional advantage of stroing wealth, secure from many potential claims on (including from husbands). It has a great empowerment service, ...

Unfortunately, such demand-driven services are limitted in outreach in many contexts, especially in Africa!. Service providers have a lot of capacity challenges to meet real demands of the poor, especially the vey poor in rural areas (including those of women, youth, etc)

Oure earlier paper (from a comprehensive field assessment) is posted at CGAP/Microfinancegateway:

http://www.microfinancegateway.org/library/overview-practical-challenges...

Regards

Getaneh (getanehg2002@yahoo.com)

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