MICROFINANCE PAPER WRAP-UP: “Smallholder Households: Distinct Segments, Different Needs;” published by CGAP

By Jamie Anderson, Ramesh Karrupusamy, Paul Enrico Neumann, Howard Miller and Ram Tamara; published by CGAP; April 2019; 12 pages; available at https://www.cgap.org/sites/default/files/publications/2019_04_Focus_Note_Smallholder_Households_Distinct_Segments_Different_Needs.pdf

To ensure that financial service providers (FSPs) are able to: (a) identify opportunities to serve smallholder households; (b) provide services that are tailored to smallholders’ needs; and (c) build loyalty with these customers, the authors argue that FSPs must identify different segments within the universe of smallholder households. Based on national survey data from Bangladesh, Côte d’Ivoire, Mozambique, Nigeria, Tanzania and Uganda, the authors propose disaggregating small-scale farmers into segments. For example, “subsisting smallholder households” are often vulnerable to one-off economic shocks or other crises, thus requiring financial services that help meet their basic needs and build long-term resilience. “Commercializing smallholder households” have had more economic success and thus benefit from financial products and services that are tailored to meet agricultural goals such as asset financing and crop insurance. “Diversifying smallholder households” tend to need more traditional financial services as they expand into activities other than agriculture.

By Jolene Khor, Research Associate

Sources and Additional Resources

CGAP Focus Note: “Smallholder Households: Distinct Segments, Different Needs”
https://www.cgap.org/sites/default/files/publications/2019_04_Focus_Note_Smallholder_Households_Distinct_Segments_Different_Needs.pdf

CGAP homepage
https://www.cgap.org

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