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

  • Roberto Simonetti
  • Marc Wuyts
  • Anna Wuyts-Fivawo
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    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 d�fauts de coordination dus � l'absence de march�s sont des contraintes au d�veloppement de la production du secteur rural dans les pays en d�veloppement. Cet article montre comment GAPI, une institution financi�re du Mozambique, a contribu� � r�duire la pauvret� gr�ce � des entreprises industrielles. La strat�gie de pr�ts innovante de GAPI est bas�e sur l'int�gration de l'offre de cr�dit, avec des am�liorations rapides dans la capacit� de remboursement des pr�ts par la fourniture de services commerciaux. Cette approche des pr�ts en termes de cha�ne de valeur se concentre sur la viabilit� de l'ensemble du r�seau de producteurs et sur les partenariats avec des institutions non marchandes que fournissent des comp�tences sp�cifiques.

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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
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