Experiences in Gender-Sensitive Solutions to Collateral Constraints

A common theme that arises in agricultural lending is the topic of collateral. There is shared acknowledgement that collateral requirements by most financial institutions and regulatory systems in low-income countries inhibit access to credit for smallholder farmers and micro, small and medium-sized enterprises (MSMEs) in the agriculture sector, particularly for those led by women. Conventional lenders, who view smallholder farmers as high risk, require collateral in the form of land or building titles and often request proof of financial stability through bank statements. Women, who face unequal access to land and property, and are
unbanked at higher rates than men, are unlikely to be able to meet collateral requirements for affordable loan products.

The aim of this paper is to provide financial service providers, women’s organizations, and policymakers with additional information on the potential for NCC to increase access to credit for women smallholder farmers and promote greater financial inclusion, and the importance of registries and sound legal frameworks to
achieving this goal.