Skip to main content

Closing the gap: Reaching the missing middle and rural poor through value chain finance

The full text article is not available for purchase.

The publisher only permits individual articles to be downloaded by subscribers.


Recent gains in microfinance have yet to reach the majority of the rural poor in developing countries. Additionally, a market gap exists for small and medium enterprises (SMEs) caught between micro finance and corporate banking. Standard banking practices for analysing risk and requirements for fixed asset collateral are critical barriers in reaching these markets. However, value chain finance – either from actors within the value chain itself or from external financial institutions – offers alternatives to these restrictive practices. This article focuses on external financial institutions operating in Africa and Latin America that are using innovative approaches to value chain finance to serve both small-scale rural producers and the SMEs that link them to urban and export markets. These unconventional methods for assessing risk and evaluating collateral present promising models for extending basic financial services to SMEs in the missing middle and to the rural poor. They also highlight opportunities for local financial institutions to enter profitable new markets and bring value chain finance models to scale, but doing so will require a change in traditional lending practices and, in some cases, policies regulating local banking industries.


Document Type: Research Article


Publication date: 2008-10-01

More about this publication?
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more