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Rural Finance Institutions, Markets And Policies In Africa


  • Pederson, Glenn D.


Since 1970, there has been a shift from emphasis on agricultural credit to one of rural finance. There has been a broadening of emphasis on the range of functions performed by financial markets to include loans, deposits and insurance services for rural people. There has also been a narrowing of expectations in recognition that financial markets are capable of achieving a smaller range of economic objectives than was envisioned in the 1970s. I will cite three factors that have changed the way we look at rural finance today compared to the view on the 1970s. First, through this era structural change has occurred, and the rural clients of financial institutions have changed. Although the population engaged in agriculture is still significant, its proportion in the total population has declined and the rural population is becoming less dependent on agriculture for income (Table 1). Depending on the region this trend may reflect a basic fact of agricultural progress (cheaper food and fewer farmers) or it may reflect the persistence of urban biased policies in developing countries. This trend reinforces the shift away from agricultural credit to rural finance with a greater emphasis on products that meet household demands for investment, consumption, savings and insurance.

Suggested Citation

  • Pederson, Glenn D., 2003. "Rural Finance Institutions, Markets And Policies In Africa," Conference Papers 28070, University of the Free State, Department of Agricultural Economics.
  • Handle: RePEc:ags:ufstcp:28070

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    References listed on IDEAS

    1. Lapenu, Cécile & Zeller, Manfred, 2001. "Distribution, growth, and performance of microfinance institutions in Africa, Asia, and Latin America," FCND briefs 114, International Food Policy Research Institute (IFPRI).
    2. Reardon, Thomas & Kelly, Valerie A. & Crawford, Eric W. & Jayne, Thomas S. & Savadogo, Kimseyinga & Clay, Daniel C., 1996. "Determinants of Farm Productivity in Africa: A Synthesis of Four Case Studies," Food Security International Development Papers 54049, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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