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Initiative

Rural-Centered Finance with Education

THE CHALLENGE

An estimated 1.7 billion adults lack access to formal financial services, and rural and low-income households are disproportionately excluded,[i] with an estimated 17 percentage point gap in bank account ownership between rural and urban adults in sub-Saharan Africa, and an 8 percentage point gap in Latin America and the Caribbean.[ii]

THE OPPORTUNITY

GP funds aim to enhance the economic resilience of households living in rural poverty by investing in financial institutions that deliver financial and educational services tailored to meet their productive needs.

RCFE TRACK 1

WHO IS SERVED?

The target demographic is rural producers and microentrepreneurs living on less than $3.20 PPP/person/day.

WHAT IS DELIVERED?

Clients must receive:

  • Working capital or asset finance loans tailored to the productive activity, often delivered through group lending; AND
  • Basic financial literacy education.

May also receive:

  • Access to savings;
  • Training covering broad-based educational topics such as financial management, business skills, productive activities, health, life skills;
  • Improved market access.

WHY IS IT IMPACTFUL?

Rural household economic well-being, resilience and food security improve due to:

• Increased business profit from productive investments

• Diversification of income sources

• Increased investment in basic household needs

RCFE Track 2

WHO IS SERVED?

The target demographic is rural producers and microentrepreneurs living on less than $5.50 PPP/person/day.

WHAT IS DELIVERED?

Clients must receive:

  • Working capital or asset finance loans tailored to the productive activity, often delivered through individual lending; AND
  • Basic financial literacy education; AND
  • Training covering broad-based educational topics such as financial management, business skills, productive activities, health, life skills;

May also receive:

  • Access to savings;
  • Improved market access.

WHY IS IT IMPACTFUL?

Client empowerment and household economic resilience and food security improves as rural clients:

  • Make more informed decisions;
  • Smooth household consumption & better deal with shocks;
  • Sustain & eventually grow investment in productive activities; and
  • Reduce the distressed sale and support the accrual of assets.

Household income stabilizes and/or increases over time as rural clients:

  • Invest in new, improved, or growing productive opportunities, practices, inputs, technology, and/or assets.

 

[i] The World Bank, The Global Findex Database 2017, https://globalfindex.worldbank.org/

[ii] CGAP analysis of 2011 World Bank Global Findex https://www.cgap.org/blog/two-persistent-divides-financial-inclusion-gender-and-rural