strategy

Creating rural banking systems

Synonyms:
Developing agricultural banks in support of rural communities
Description:
Creating rural banking systems to facilitate access to credit for rural population, particularly women and indigenous groups, and to promote rural savings.
Context:
Specialized agricultural banks have distinctive functions and requirements which include supervision of productive activities of their clients, a rigorous project appraisal exercise, different performance criteria and different skill requirements for their staff. They rely heavily on foreign loans and government contributions. They are financial intermediaries in a restricted sense, in that they extend credit but rarely mobilize savings.
Implementation:
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities. Agenda 21 recommends establishing and/or expanding favourable conditions for the provision of services, such as credit facilities and marketing outlets for rural populations.
Counter Claim:
Specialized agricultural banks face a number of problems, starting with often non-performing loans. Moreover, their fixed interest rates barely cover their average operating costs and are rarely revised to allow for prevailing levels of inflation. As a result the purchasing power of their portfolios tends to diminish. Like the commercial banking system, agricultural banks do not appear to have had an appreciable impact on smallholder agriculture. Loans are usually channelled to big commercial farmers while small, unmechanized, rain-fed agricultural operations tend to be neglected.
Values:
Support
Type Classification:
C: Cross-sectoral strategies
Related UN Sustainable Development Goals:
GOAL 1: No PovertyGOAL 2: Zero HungerGOAL 3: Good Health and Well-beingGOAL 4: Quality EducationGOAL 5: Gender EqualityGOAL 6: Clean Water and SanitationGOAL 7: Affordable and Clean EnergyGOAL 8: Decent Work and Economic GrowthGOAL 9: Industry, Innovation and InfrastructureGOAL 10: Reduced InequalityGOAL 11: Sustainable Cities and CommunitiesGOAL 12: Responsible Consumption and ProductionGOAL 13: Climate ActionGOAL 14: Life Below WaterGOAL 15: Life on LandGOAL 16: Peace and Justice Strong InstitutionsGOAL 17: Partnerships to achieve the Goal