The Initiative for Smallholder Finance Briefing Template

One of the reasons this finance gap persists is that investors lack sufficient data about the benefits and risks of directing their funds to smallholder agricultural finance. Without this information, investors have little evidence about and therefore little understanding of how to provide smallholder agricultural markets with the finance they need. Organizations and initiatives have sought to address this by developing and testing business models to serve smallholder agricultural markets, but no one has compiled the evidence from these efforts in a meaningful way. A number of innovative and promising new impact and risk measurement tools have emerged, but it is challenging to understand their varying functions and how they fit together. In light of this situation, the Initiative for Smallholder Finance has taken stock of the existing landscape of smallholder impact and risk measurement and devised tools and suggestions to align these efforts for greater future impact. The Initiative for Smallholder Finance considers impact and risk measurement to be related concepts. The risk of client default in smallholder agricultural finance is directly linked to an agricultural lending program's ability to drive impact in the form of increased production, stable and premium pricing, and sustainable practice adoption – the metrics that form the basis of impact measurement. Lending programs that do not create additional income for farmers run a significant risk of default. Programs that do not encourage sustainable practice adoption run both reputational risks of being associated with socially or environmentally exploitative activities, as well as the risk that farmer's products are unable to find markets – in this case, farmers' incomes would not increase. The Initiative for Smallholder Finance has created several new tools to clarify the smallholder metrics space and set the stage for increased collaboration. These tools include a universal smallholder theory of change, a smallholder impact literature wiki, and a landscape of smallholder impact and risk assessment tools. The universal smallholder theory of change represents an emerging consensus on a common theory of change across the smallholder agricultural finance community. It provides a framework in which collaboration can take place and helps shape a shared vision so the industry can tell a cohesive story about the impact their work is creating for smallholder farmers. The smallholder impact literature wiki is a platform that enables the smallholder community to easily access the growing body of literature about the impact of smallholder interventions. It is seeded with over 100 relevant articles, studies, and trials about smallholder impact and is available at http://smallholderimpactliterature.globaldevincubator.org. The wiki is intended to be a living tool and can be modified by anyone in the smallholder community. It will allow practitioners to quickly access studies and findings that can reinforce their impact and inform new efforts. The landscape of smallholder impact and risk assessment tools is an interactive map and accompanying video that present an inventory of the existing tools for smallholder impact measurement. It is available at http://smallholdermetricslandscape.globaldevincubator.org and helps smallholder agricultural lenders develop a clear understanding of the many tools available to meet metrics needs. The Initiative for Smallholder Finance's new metrics collaboration tools intend to simplify the complicated landscape of impact measurement in smallholder finance and provide a framework for collaboration among industry stakeholders.