Challenges

While the number of both FinTech and AgriTech companies has grown significantly within the last years in Latin America, their offerings to smallholder farmers remain limited. A general review of the start-ups in the region shows that a significant number of companies target mainly medium or large clients, who may be more likely to acquire products and services given their size, technical knowledge, and availability of resources (IDB Lab, 2019).

Most of these technology companies are willing to innovate and improve their services because of the business opportunities of this untapped market and their higher risk tolerance, whereas traditional and commercial banking take conservative measures, focusing their portfolio on non-risky urban clients, and therefore are even more reluctant to provide services to small-scale farmers due to higher perceived risk. However, they cannot cope with the increasing demand for financing and technical solution of smallholders in the rural areas because of the high cost that adopting these solutions entails and their early stage and limited financial and human resources. Therefore, it is necessary to invest in them and strengthen their capacities to supply digital services and technological solutions to IFAD’s target group by helping them access both financing and technology

Primary target

Which group does your product/service primarily target?

Description of Innovation

This project targets vulnerable groups such as women, youth and indigenous people. Preliminary analysis of AgriTech/Fintech companies in particular shows that young men lead most innovations while the participation of women in AgriTech innovation is significantly lower.. The proposed participation is of at least 50% of women in all activities, as well as at least 25% of youth participation

The project has four components: Component 1: Assessment of the demand and supply of innovative AgriTech/FinTech services, aims to identify the specific demand and supply of new services for smallholder to set up the selection criteria and process to evaluate investments into FinTech and AgriTech. Component 2: Mainstreaming AgriTech/Fintech innovative services for economic recovery, aims to facilitate investments and technical activities required by these enterprises to develop alternatives and innovations in production, commercialization and financing. Component 3: Broadening innovation through finance leveraging for up scaling and sustainability aiming to prepare companies for scaling up those services and technical solutions to other IFAD projects. Component 4: Monitoring and Evaluation, and Knowledge Management, aims at developing the adequate systems for management and effective monitoring of the project, and relevant knowledge products that will be the base knowledge for similar experiences in the future. The project intends to leverage multiple innovative digital financial products to cover the operatio

Results

Still too early to be seen

Lessons Learnt

- The importance of using the established network of practitioners and innovation champions in the different countries, as well as the projects’ staff and already identified organisations that can be interested in adopting the technologies.

The regulatory framework in the various countries is varied, while some estimulate the development of digital companies and innovations, others remain on a traditional perspective, requiring, for instance, physical branches, offices, paper procedures and others.