AVC shifted its work from facilitating individual loans to farmers, to catalyzing system wide change in the financial services industry. The shift focused on moving away from interventions designed to generate one-off transactions to working more closely with a range of financial service providers such as banks, insurance companies, private firms providing value chain finance, MFIs and venture capital firms. Through the process of engaging these financial services firms, AVC identified a number of emerging shifts that it began reinforcing. The first is the realization on the part of banks that due to policy and market dynamics, they have to take rural clients more seriously, including agricultural clients. While most banks and financial service providers (FSPs) are hesitant, an increasing number of FSPs realized they can gain market share if they invest in delivering tailored services and learn how to properly manage such a portfolio/client segment.

The second major shift that is emerging is the evolution of MFIs. Again, the traditional MFI remains active, but there is an increasing number of MFIs that see the old way of doing business is slowing as rural population gain wealth. For these leading edge MFIs they see that they have to evolve with their client base and are investing in new products and services. They are moving into modified Islamic banking products, venture capital linked to mentoring services, and more bank-like SME products.

The third major shift is an emerging set of new services and products. Rural clients are starting to become more sophisticated requiring more tailored products and services such as purpose built saving products, varied value chain finance, insurance, and venture capital/investment banking services. Although still nascent, the emergence of these products is critical for SMEs growth, technology innovation and adoption, alliances to form and grow, and trading relationships to manage larger volumes.


Financial flows within the market system