linking poor rural households to microfinance

Linking Poor Rural Households to Microfinance

Background

– Chronically food insecure (CFI)

– Government safety net program

– Graduate CFI - food/cash transfers

– More resilient, but not sufficient

– Need diversified approach to overcome • systematic• structural• institutional and • attitudinal barriers

Program Frameworktowards food security– Provide alternative and accelerated pathways

– Deliberate and concurrent assistance

• access contextually relevant MF services

• stepped approach

• integration to markets

VSL Groups

Insurance

Value Chain Finance

SME Loans

Individual Linkages

Group Linkages

PSNP PLUS targeted households

Program’s Strategic FrameworkPathway to graduation from food insecurity

Stable Household Economy

Chronic Food Insecurity

Vulnerable To Food Insecurity

Asset Transfer

“Push” by Asset Transfer, VSLA, Access to tailored MF products, productivity increases

“Pull” by access to markets

PSNP PLUS graduated households in 3 yrs

Asset accum

ulationA

sset stabilisation

STRATEGIES

– Savings led financial service - VSLA

– MFI Linkage - existing/ new products

– Business skills

– Financial literacy

Why saving based MF to Food Security ?

– Insurance - bad harvest, illness

– Avoid cutting consumption, risky practices

– Smooth uneven cash flow

– Protect productive asset

– Diversify income source

– Improved human capital – nutrition, education, health

– Build asset – livestock, house, furniture, farm tools

– Improves social capital - better social network & information

– Life cycle events