Advancing Financial Inclusion in Agri-Food Supply Chains: A Policy Intervention Through the Lens of Microfinancing and Risk-Based Thinking

Agri-food supply chains in developing economies heavily rely on small and medium-scale farmer communities, and they are facing financial issues. Many developing countries are finding solutions through microfinance for this issue. This study has conducted a comprehensive risk assessment of the rural microfinance lifecycle in developing economies. The study is focusing on identifying the risks involved in the life cycle of the loan process from both microfinance institutions’ and rural communities’ perspectives, and proposing risk mitigation strategies that can be integrated throughout this process. The identified main risk categories are credit risk, interest rate risk, liquidity risk, operational risk, and regulatory risk from the microfinance perspective. From the perspective of the rural farmer community, involved risks are access to credit, production risks, market risks, and social and economic risks. The risk register method has been employed to assess the identified risks, propose risk mitigation strategies, and measure the residual risk after integrating the mitigation strategies. This study will help policymakers and researchers develop more effective microfinance operations that benefit both the microfinance institutions’ and rural communities’ efforts to develop a more sustainable system through change management.