Millions of farmers in developing countries do not have access to (affordable) formal forms of mainstream finance, making it hard for them to invest in their business and get out of the poverty trap. Because farmers often do not have the necessary collateral, cash or contracts, they are considered a too high investment risk by local banks. As a result farmers rely on middle-men and the informal sector for their trade finance, often against high costs and unfavourable terms.

The global finance need is estimated to be between US$25-83 billion, while the offer of affordable credit by local banks and micro finance institutes serves only a fraction of the financing gap. Click here for ForeFinance report “The Agricultural SME Financing Gap” (January 2010).

ForeFinance™ bridges the finance gap

NewForesight™ plans to bridge this finance gap by introducing a new model; ‘ForeFinance’. Through the concept of ‘credit-scoring’ ForeFinance will assess the operational and financial performance of certified sustainable farmers and score them on their credit-worthiness. ForeFinance will link these profiles to local banks and social investment funds and keep track of the pay-back behavior of  farmers, allowing them to build a credible track record over time.

ForeFinance™ links producers to capacity building programs

At the same time, the outcome of the credit-scoring profile shows the producer what is already doing well and how he can improve even further. Through partnerships with capacity building programs, ForeFinance™ can link those producers who would like to improve their business to support programs from NGO’s, resulting in higher scores.

Added value of the ForeFinance™ model

ForeFinance™ gives farmers the ability to proof their professionalism and credit worthiness and get access to credit to invest their way out of poverty. And banks get access to an attractive, fast growing market of committed, sustainable and professional farmers.

ForeFinance™ is not a product or an investment service, but instead an enabler for market transformation with the potential for large impact on system level. Simply by linking professional and sustainable farmers to committed banks, give them access to credit and give them the opportunity to proof their credit worthiness, ForeFinance™ becomes a major driver for sustainable change

Special thanks to MarkedMedia for producing the film and AstridAnimiatie for making this. 

Timeline

2009:

• Develop credit-scoring standard
• Engage pilot partners

2010

• Q1: Finalize credit-scoring standard through expert consultations
• Q2,3: Field test standard in 4 pilot projects in Africa
• Q4: Launch the ForeFinance™ program

US$ 1 billion by 2020

ForeFinance™ intends to be fully operational on a global scale in 2 years and globally rate / profile  between 150-300 producers (groups) per year. We aim to enable an additional amount of US$ 150 million in mainstream access to finance for sustainable agricultural producers by 2013, and up to US$ 1 billion by 2020.

AgriFinancePlaza: (AFP) Internet-based Lending Market Place with the mission to link credit-seeking agricultural producer organizations to mainstream local and international capital markets. The AFP will bring bankable-rated farmers to the lending market by allowing the ForeFinance™ profiles/ratings to be posted as “Lending Opportunities” on its regional agents’ websites (Agri Finance Africa, Latin America and Asia). These “Lending Opportunities”, will be only accessible for a carefully compiled network of Lenders located in the South and considered to be sincerely dedicated and capable to service captioned market.

Visit the AgriFinancePlaza website

ICCO:  The Dutch interchurch organization for development cooperation. ICCO supports the ForeFinance™ concept and offered the intitial seed capital to kickstart the program.

Visit the ICCO website

FAST: (Financial Alliance for Sustainable Trade) A global, member-driven, non-profit association, representing social and alternative lenders in the North and producers in the South. Together FAST and ForeFinance™  will improve access and availability of affordable finance to sustainable producers in developing countries.

Visit the FAST website

George Washington University: (Institute for Corporate Responsibility) is actively involved in engaging significant stakeholders in the US in the field of AgriFinance and will be involved in handling part of the trade and policy research agenda that comes out of designing and implementing the ForeFinance™ concept.

Visit the ICR website

Do you believe in the ForeFinance program and would like to become a partner, please contact us for more information.