Value Chains and Their Significance for Addressing the Rural Finance Challenge

For the last two decades, rural finance in developing countries has been drastically reduced. This microREPORT argues that one answer to the challenge of rural finance lies in our ability to complement a financial market orientation—one that focuses on financial institutions, the products they deliver, and the constraints and distortions they confront—with a product-market orientation—one that focuses on rural enterprises, the value chains they participate in, the opportunities and constraints they face, and the most critical financial services they demand. Together this microREPORT and the RAFI Note #1, "A Fresh Look at Rural and Agricultural Finance,” demonstrate MD’s strategy of viewing FS and BDS under a common framework.