The Agricultural Finance Markets Scoping (AgFiMS) is a country by country diagnostic tool which researches, collates and presents data about the demand for and supply of financial services in the agricultural sector. The aim of AgFiMS is to boost the supply of, and enhance the access to agricultural finance through market-leading innovation and policy change. The first AgFiMS took place in Tanzania between April and September 2011. Its range included an examination of both the demand and supply side of agri-finance. The demand study used a nationally representative sample of 626 Enumerator Areas (EAs) provided by the National Bureau of Statistics (NBS). Interviews were undertaken with a variety of people working in agriculture, determined after a careful listing exercise which defined selected households.
The AgFiMS research design, methodology and approach is likely to be replicated in multiple countries. It will then form the basis of a cross-country benchmark of progress in developing agricultural financial markets, allowing stakeholders to learn from successes and challenges in other places. Both quantitative and qualitative research methods were used in the supply side study. Data was collected from primary sources including interviews and surveys. These were drawn from a sample composed of fi nancial institutions at formal, semi formal and informal levels, government bodies, donors, private sector companies and other stakeholders. Secondary sources included other surveys such as FinScope Tanzania 2009. In spite of greater emphasis in recent years, both smallholder and agri-business finance continue to be considered high risk by the financial community.
This has hampered the development of financial services and products suited to agriculture and limited the penetration of micro-finance and formal bank finance in rural areas. As a result the need for finance for production, processing or trading of agricultural products is not being met. In addition, the need for crop, weather and price risk insurance products remains largely unsatisfied. Analysis from AgFiMS bridges the information gap about the extent and type of need for financial services in the agricultural sector. It also examines the best distribution channels for fi nancial services at different points along the supply chain.
AgFiMS can identify potential markets and areas for targeted investment. The data provides both the means and motive for the Government, donors, the financial industry, civil society organisations and other public and private sector stakeholders to design collaborative interventions to encourage agricultural finance on a market-led basis.
