Farmer Access to Credit

Building Credit Capacity for Rural Honduran Farmers

ACDI/VOCA implemented the Millennium Challenge Corporation-funded Honduras Farmer Access to Credit, or Acceso a Crédito para Agricultores (ACA), project. The 2 ½-year program increased the supply of credit and the availability of other financial services to smallholder farmers, agribusinesses and rural enterprises throughout Honduras.

Through ACA, ACDI/VOCA provided technical assistance to develop the capacity of local financial and nonfinancial institutions to offer credit and other services to a broad range of farmers and rural entrepreneurs who have traditionally lacked access to them. ACA improved access to credit through three subactivities: technical assistance to financial institutions, a loan fund and assistance in developing a movable property registry. Financing under the project’s loan fund facilitated the supply of credit to farmers in the short term, which in turn fosters long-term growth by promoting, on strictly commercial terms, the sustainable expansion of financial services to farmers and other rural enterprises.

The project’s efforts to strengthen value chain financing and increase the supply of services to the agricultural sector resulted in 9,000 loans benefitting 5,400 horticultural farmers and businesses. At the institutional level, the project worked with partner institutions to new rural financial products and establish loan management tools through the installment and operation of lending analysis and tracking software.

Given the size and the dispersed nature of the farmers’ operations, ACDI/VOCA’s approach under ACA was to work with a large number and range of institutions in order to spread a wide net, not only regionally but also across loan size ranges and needs. In following this methodology, the program developed partnerships with banks and nonbank financial institutions (NBFIs) as well as with important suppliers of credit to small farmers—the input providers (retail and wholesale) and the exporters/buyers. ACDI/VOCA involved value chain members who provide a strong measure of risk mitigation to the financing of the small producer.