Agricultural Finance Support Facility An Initiative to Jump-start Agricultural and Rural Finance through Institutional Capacity Building A partnership with the Bill and Melinda Gates Foundation

Context: Access to Finance in Rural Areas Scarce, yet successful models of provision exist  Of the over 1 billion smallholder farmers and other rural entrepreneurs worldwide, most have little access to financial services  Provision of rural finance considered too risky and loss-making  Yet, profitable examples from all parts of the world  In small countries (Armenia, Kyrgyz Republic) and large countries (India, Thailand)  By private (ACBA, Armenia and Equity Bank, Kenya) and public institutions (Public Commercial Banks in India, BAAC Thailand)

Objective: Demonstrate profitability of rural finance  Objective 1: Replicate or scale up business models to profitably provide financial services to smallholder farmers and rural entrepreneurs  Objective 2: generate knowledge and facilitate learning about profitable rural finance business models

Target Groups: Retail FIs, Smallholder farmers, Credit+ Target Project Beneficiaries Target Financial Services Target Institutions  Smallholder farmers  Rural entrepreneurs  Credit: Short- term and long- term  Others: Deposits and Insurance  Retail financial institutions  Market Facilitators Target Regions: 50% - Africa; 50% - South Asia, East Asia and MENA

Strategy: Sub-projects and learning  Co-finance rural outreach sub-projects. Matching grants for technical advise, staff capacity building, new technology, etc. Matching grants for technical advise, staff capacity building, new technology, etc. No credit lines or guarantees No credit lines or guarantees Grantee commitment for human and financial resources Grantee commitment for human and financial resources Average Grant amount of $750,000 Average Grant amount of $750,000  Organize learning activities  Annual conferences, Study tours, Seminars, and Publications  For grantees, WB staff, and other sector stakeholders

Budget: ≈ US$ 20 million

Implementation Arrangements Steering Committee 2 WB representatives 2 BMGF representatives 4 external experts Project Management Team Rural Finance Advisor Program Coordinator Operations and Communications Officers Learning and Program Analysts Africa Operations Team Program Officer Regional Sr. Rural Finance Specialist Asia Operations Team Program Officer Regional Sr. Rural Finance Specialist

Aligned to strategic priorities of the World Bank  Aligned with WB’s Agricultural and Rural Strategy and WDR 2008: Agriculture for Development  Supports institutional development for sustainable service delivery of a vital service in rural areas  Responds to consistent client demand  Compliments major Bank agricultural investments  Engages with the private sector from a “bottom of the pyramid” perspective

Who is eligible for grant funding from the AFSF?  Financial institutions in Africa and Asia who:  are operating on commercial principals  are profitable or can demonstrate near-term profitability  plan to enter rural areas as a new business line or expand their presence there  demonstrate their commitment to enter rural and agricultural finance by committing own resources as matching funds  have senior management and board support in this venture.

How to apply?  Develop a Concept Note containing the following, among other information:  business history including financial information  information on management, business systems and staff  short outline of proposed strategy to enter rural financial markets  planned use of funding Forward the Note to AFSF staff and obtain invitation to prepare a full proposal.Forward the Note to AFSF staff and obtain invitation to prepare a full proposal.

Vision of Success Provision of financial services in rural areas is a profitable business line for financial institutions.