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Banking on Rural Innovation for Poverty Reduction: A Case Study of Value-chain Lending in Mozambique

Listed author(s):
  • Roberto Simonetti
  • Marc Wuyts
  • Anna Wuyts-Fivawo
Registered author(s):

    Coordination failures due to the absence of markets are a key constraint to the development of rural production in low-income countries. This paper shows how GAPI, a domestic financial institution in Mozambique, has contributed to poverty reduction through successful industrial ventures. GAPI's innovative lending strategy is based on the integration of supply of credit with the active improvement of the borrowers' ability to repay loans through the provision of business services, a value-chain approach to lending that focuses on the viability of whole networks of producers, and partnerships with non-market institutions that provide centres of specific competencies. Les défauts de coordination dus à l'absence de marchés sont des contraintes au développement de la production du secteur rural dans les pays en développement. Cet article montre comment GAPI, une institution financière du Mozambique, a contribué à réduire la pauvreté grâce à des entreprises industrielles. La stratégie de prêts innovante de GAPI est basée sur l'intégration de l'offre de crédit, avec des améliorations rapides dans la capacité de remboursement des prêts par la fourniture de services commerciaux. Cette approche des prêts en termes de chaîne de valeur se concentre sur la viabilité de l'ensemble du réseau de producteurs et sur les partenariats avec des institutions non marchandes que fournissent des compétences spécifiques.

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    Article provided by Taylor and Francis Journals in its journal The European Journal of Development Research.

    Volume (Year): 19 (2007)
    Issue (Month): 1 ()
    Pages: 136-155

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    Handle: RePEc:taf:eurjdr:v:19:y:2007:i:1:p:136-155
    DOI: 10.1080/09578810601144392
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