Abstract
In the context of a growing food crisis with more than a billion people suffering from hunger, it is clear how important it is to study optimising the farming sector by increasing the ways it is financed in order to serve a larger number of the poor. The issue is to analyse how microfinance can contribute to improving the financing of farming in order to favour an improvement in the living conditions of poor populations. This financing could be improved and efficiently ensured if microfinance services were innovative and adapted to this purpose. Farm households’ capacities capacities have a dual influence on the poverty-reduction process through their productivity, on one hand, and through distribution of income, on the other. More specifically, we use these facts as the basis to evaluate the impact that the financial sector can have on agricultural productivity and the impact that agricultural productivity can in turn have on poverty. It emerges that the financial sector, having reached a certain stage in its current development, is not contributing to improving productivity but is a key factor that acts positively on reducing poverty. In addition, there is a negative, non-linear relationship between agricultural productivity and poverty. Yet, in view of improving the actions of the financial sector with respect to farmers, one could develop a framework that promotes financial intermediation based on microfinance. As a result, it is necessary to valorise and popularise microfinance actions directed at farmers. The development of adequate and adapted financing through microfinance in the farming sector should be a priority for West African countries in order to enable the latter to experience the positive influence in both the process of improving productivity and in the process of reducing poverty.
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- 1.
See the United Nations bluebook called “Building inclusive financial sectors,” United Nations, New York, 2006.
- 2.
Kofi Annan spoke in these terms in December 2003, following the designation of 2005 as the international year of microcredit: “The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector… Together, we can and must build inclusive financial sectors that help people improve their lives.” DAES and FENU (2006) Building inclusive financial sectors, United Nations, New York.
- 3.
See the United Nations bluebook called “Building inclusive financial sectors”, United Nations, New York, 2006.
- 4.
Christiaensen and Demery (2007) “Agriculture et réduction de la pauvreté en Afrique : une analyse terre à terre.”
- 5.
The cost of credit is not covered by the repayment rate.
- 6.
A household’s capacities refer to physical capacities such as level of education, health, standard of living and farmland. There are also material capacities that are related to finance, which are savings and credit granted.
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Kendo, S. (2012). Financing Agriculture and the Food Crisis in Africa: What Role Can Microfinance Play?. In: Ayuk, E., Kaboré, S. (eds) Wealth through Integration. Insight and Innovation in International Development, vol 4. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-4415-2_12
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