1. ICCO desk-study on linking Rural Financial Services to producers in the context of a value chain & Roadmap Value Chain Development 19 November 2009

2. 11 Cases - Rich diversity of VCF 5 main finance arrangements:  Fully embedded  MFI finance  Bank finance  MFI –> actor –> producers  [Bank -> actor -> producer]

3. 3 Institutional modalities/dynamics Finance by value chain operators: ‘All-in-one’: Actor/promoter/financier Finance by value chain operators: ‘All-in-one’: Actor/promoter/financier Finance by specialised finance providers (MFIs) that evolved out of a value chain actor Finance by specialised finance providers (MFIs) that evolved out of a value chain actor Finance by a FSP (MFI/Bank) that was linked up to the value chain actors Finance by a FSP (MFI/Bank) that was linked up to the value chain actors

4. Levels of maturity & Frontier areas in VCF

5. VCF = chemistry between VCD and finance A complicated Chemistry. Bottom line: risk mitigation

6. Lessons learned (1) Identification: Strong lead partner Strong lead partner Orchestration of promising VCF strategy (South) Orchestration of promising VCF strategy (South) Orchestration of VCD/VCF departments / officers (North) Orchestration of VCD/VCF departments / officers (North)Design Lead chain actor = designer Lead chain actor = designer Based on VC analysis & feasibility study Based on VC analysis & feasibility study Assess institutional modalities in local context Assess institutional modalities in local context Design Separate facilitator and provider roles Identify sources of risk reduction Perspective for growth to maturity in VCF Embedded finance: limits & benefits Assess need CB and design program Change of mind set chain actors (double loop learning)

7. Lessons learned 2) Engaging FSPs Identify finance potential and potential financiers Identify finance potential and potential financiers How to facilitate the link? How to facilitate the link? Facilitate (gradually) increasing exposure Facilitate (gradually) increasing exposure Choice of instruments Avoid crowding out with grants Avoid crowding out with grants Choose appropriate financial instrument Choose appropriate financial instrument

8. Thank You 