Agri-commodity financing gaps: How national development banks can respond

Agriculture is an important sector for most developing countries given its significance in providing food security and as a key contributor to GDP. However, agricultural SMEs in complex global value chains (GVCs) struggle to develop the capabilities to diversify their revenue streams, access value added markets and upgrade to greener production practices. Two main challenges include access to financing their operations and diversifying both products and buyers. The COVID-19 pandemic increased the severity of these two challenges threatening the development of sustainable GVCs. In addition to demand shocks to trade due to the pandemic, the health-related measures put new barriers to selling and buying goods and services across borders. This has negatively impacted the reality of producers in developing countries supplying GVCs. Key questions: 1. What challenges do SMEs face in developing sustainable markets and produce sustainable products? 2. How has COVID-19 impacted existing financing strategies for supporting SMEs in developing countries develop sustainable markets? 3. What strategies have national development banks employed to best address current financing challenges facing SMEs in agri-commodity sectors in developing countries?
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