25 March 2024

Why farmer financial inclusion matters

By Ashley Olson Onyango, Head of Financial Inclusion and AgriTech, GSMA


Smallholder farmers produce over 30 percent of the world’s food supply and support nearly 500 million livelihoods globally. Yet they still struggle to access basic financial services like credit, savings, insurance,  and digital transfers – a worrying reality considering our dependence on them for survival.

Smallholder farmers lack formal identification and the credit history and collateral needed to qualify for loans. They’re often based in remote areas with limited connectivity and have lower levels of digital financial literacy.


What can central banks and regulators do to help?

Any enabling policy that drives financial inclusion will benefit smallholder farmers, but there are particular areas where central banks and regulators can make a real difference, including:

  • Promoting e-KYC onboarding in remote areas, particularly tiered KYC that accepts alternatives to formal identification.
  • Encouraging providers to invest in rural infrastructure that can drive digital financial inclusion to the last mile.
  • Digitizing ministries of agriculture: by opting for digital subsidy- and government-to-business payments, agricultural ministries can incentivize farmers to embrace digital financial services.

Farmer financial inclusion is all about finding alternatives

At GMSA we recently worked with a consortium of partners in Papua New Guinea to come up with a rural loan product for vanilla farmers. For smallholder farmers, access to credit is fundamental to growing their business, and allows them to produce the crops which feed the world.

90 percent of the farmers involved in the program have never owned a bank account and many didn’t have the formal identification needed to access credit from financial service providers (FSPs). But local, mobile-based digital agriculture tools already operating in Papua New Guinea generate digital financial footprints populated with farm and farmer data. The program helped develop mechanisms to share this existing financial data with FSPs to perform credit risk assessments of farmers in need of loans.

330 farmers received loans through the program, 35 percent of them women. Most used the loan to buy farming equipment, hire labor, or to start a complementary revenue-generating business on the side. In an industry with a USD 170 billion funding gap, projects like these are critical.

Driving financial inclusion to the last mile is critical to supporting the nearly 500 million people globally who rely on farming for their livelihoods, as well as ensuring sustainable food systems and increased production to meet the world’s growing demand for food.  This requires a collaborative approach and we welcome increased dialogue between the public and private sector to support greater investment in reaching the last mile with digital financial services.



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