Annual Report FY16: Rural Finance Initiative

The Initiative aims to promote inclusive financial intermediation of women, Afro-Colombians, indigenous, and other marginalized populations. RFI provides technical assistance and training to financial intermediaries (FIs) in the provision of market-based rural financial services to micro, small, and medium-sized enterprises. By the end of 2020, RFI targets 200,000 new rural clients, with more than 50% being women, connected to formal financial services and accessing USD$500 million in new loans, savings, insurances, and other financial products. The Initiative focuses on 197 municipalities prioritized by the Government of Colombia and USAID, distributed in seven economic corridors. All agricultural financing in these municipalities is directed to economic activities in dispersed rural areas or veredas around target rural municipalities. In FY16, RFI successfully signed Memoranda of Understanding (MoUs) with 21 partner institutions, including 13 financial intermediaries and 7 non-financial intermediaries. These partner institutions include some of the largest and best-known banks and financial institutions in the country, as well as Government agencies, universities, and private companies. RFI provides targeted technical assistance and innovative approaches to FIs, including technical assistance and training for commercial banks, cooperatives, finance companies, and microfinance NGOs to seize profitable business opportunities for expansion of client-responsive services into rural areas. Since its inception, RFI has co-developed work plans and awarded incentive grants totaling USD$1,273,938 to eight of these FIs, whose leveraged resources total USD$4,046,403. Moreover, RFI has had a positive effect on the livelihoods of more than 39,000 clients in 192 different municipalities throughout RFI's seven corridors. During its first year, the Initiative supported the approval of 27,930 credit loans and 5,718 insurance policies, as well as the opening of 6,088 savings accounts. RFI has also made it possible for 19 new banking correspondents to start operations in rural areas thanks to incentive grants. As of September 30th 2016, nine partner institutions are reporting progress to date, providing financial services to 192 municipalities (97%). RFI has been able to expand financial services to a total of 39,736 new clients, with 19,741 (53%) being women, thereby reaching the Initiative's target of 50% female participation. RFI is also tracking uptake of vulnerable populations, with 22% of the total clients being Afro-Colombians and indigenous populations. The Initiative works in synergy with other USAID programs, including Consolidation and Enhanced Livelihoods Initiative (CELI); Conservation Landscapes Program (CLP); Land and Rural Development Project (LRDP); Reintegration and Prevention of Recruitment (RPR); and Victims Institutional Strengthening Program (VISP). These non-financial services build a strong social fabric in populations that long needed the full array of financial services.