Executive Summary

The objective of this conference is to capture the lessons and best practices-the successes and failures in agricultural finance, financial liberalization, risk management and microfinance-to pave the way forward for smart, sustainable financial market services tailored for the specific challenges of rural economies. The goal of the conference is to initiate a structured dialogue among different industry players to generate donor and practitioner guidelines for rural financial market development and to discuss ways to improve rural finance policies.

The Problem

The state of rural financial markets in developing countries and economies in transition is characterized by low and decreasing availability of financing for both agricultural and non-agricultural activities. Rural areas are often characterized by a paucity of viable financial institutions and by lack of variety, breadth and range of financial services available. Rural communities often do not have access to savings services, credit products tailored to purpose, insurance, or transaction services. There is also very limited access to long-term financing needed for agriculture, land and other rural enterprises.

Weak rural financial markets can create traps that reproduce poverty over time, depress the rate of rural growth and distort its income distribution consequences. Servicing rural financial markets is important because of the combined (1) high incidence of poverty in rural areas and growing income inequality between urban and rural markets and (2) concerns for food security and population vulnerability in rural communities. The question is not whether to address these issues, but how.

Innovating for the Future

The solutions to the obstacles encountered in rural finance will be more than credit and more than agriculture. Today's rural finance solutions require an integrated systems development approach.

The rural sector has its own characteristics which have to be addressed: geographic dispersion, heterogeneity of population, seasonality of economies, lower profits, higher risks, insecure loan collateral and deficient or absent financial institutions. Previous experience can provide lessons but advancement of the rural finance sector will require dedication to its own characteristics and development of its own lessons. This will require cross cutting themes and integration of the policy environment, infrastructure complementarity, institutional sustainability and innovations in technology.

The Conference

Paving the Way Forward for Rural Finance: An International Conference on Best Practices, aims to produce in depth operational conclusions on necessary policy environments and infrastructural supports, achievements of financial institution sustainability, and innovation in technologies for rural financial services, culminating in donor and practitioner guidelines for rural financial market policy and development.

Collaboratively engaging key practitioners, donors, academics, and government policy makers, the conference will provide a forum to present and discuss the latest concepts and current knowledge of rural financial markets grounded in real life applications and innovative best practices.