Inter-sectoral learning trajectory on value chain finance
In many of our sector programs, a great challenge to sustainability is the lack of financial services available to producers and other upstream chain agents. Often they are considered “unbankable”. This impedes investments and, therefore, sustainability. For this reason we are setting up an inter-sectoral learning trajectory on value chain finance. These are financial services that are designed and delivered on basis of cooperation in the supply chain.
The chain relations constitute a soft collateral for loans. If a lead firm is willing to vouch for its suppliers, even small-scale farmers may become bankable. Costs and risks are reduced, and therefore, agricultural lending becomes a viable operation. IDH will be exploring value chain finance in cocoa, timber, aquaculture, cotton.
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