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Re: Innovative financing for agriculture, food security and nutrition


Dear Participants and moderator of the FSN Forum,

Innovative finance, traditional finance and regressive finance:

1.       I got confusion about the term of innovative finance used on this
cycle of discussion.  From my understanding the innovative finance is a new
or creative approach which makes positive change in society and benefits
mostly to socially disadvantaged group. However, the discussion is mostly
oriented on traditional financial sources: remitances, community fund etc.
Based on my experience community people collect money from households
and various other community activities and use it in developing, improving, or
maintaining common resources such as irrigation canals. So does the
remittance for buying land, agricultural equipments and other inputs. Many
communities are practicing them from history. In some areas the practice
might have started recently. Is this an innovative finance or traditional
finance? Do place/ community and time matter to be a investment mechanism
as an innovative finance?

In Nepal a few community forest user groups have used some community
forestry income mostly generated from timber sale to help poor households
to invest in livestock. IFAD also provides similar type of support in
collaboration with government. The income from REDD programme, the payment
for environmental services of forestry is also considered new financing
systems for rural development. The programmes are destroying many community
systems which were sustainable and fair in society. International aid
agencies, professional elite and NGOs claimed in their reports that these
are innovative finance and worth of expanding in other communities. However
the households and particularly the poor ones, had got much more benefits
when they had easy access to non-timber products and services in
traditional forest management systems.  The benefit the households got from
previous regime was on kinds and the new regime provided the benefit in
cash form. The net benefit is negative in society and poor households have
suffered most. Can any financial development expert explain me whether
it is an innovative finance or regressive finance?  From my understanding
it is vested interest group constructed concept of innovative finance and
the reality is the other side.

I see similar problems on the innovative finance which is intended to
explore in this discussion forum. The people working in finance are smart
and put old wine into new bottle and sale to society as a new product.

2.       If anybody has innovative finance its target should be in the
neglected and high impact areas. This is generally the areas where the
funding from government and other common financing sources are not
institutionalized. The problems areas are not universal in characteristics
but specific to community and country.

Thanks for your reading time and interest.
Best Wishes.
Bhubaneswor Dhakal