B. Designing adequate microfinance products and services
Sectors for Financing
FAO/20674/E. Yeves
When analysing changes in this area, the following questions should be kept in mind: Which are the preferred rural sectors among the poor? Are there new areas (appropriate to their means) that they would like to explore? How would MFI products (repayment requirements) be adjusted to suit each of these sectors? What are the risks for the banks?
In 2003, FAO's Investment Centre made a series of recommendations aimed at assisting EBRD/ProCredit Bank in Bulgaria in developing appropriate microfinance products and lending strategies that respond to small farmers' real needs and capacities, as defined by themselves.
The Study highlighted how for small and micro family farms the most promising and appropriate sectors for financing are the intensive sectors of vegetable growing, vineyards and livestock; the latter assuring a daily income. On the basis of these findings suggestions were made to subsequently change conditions for loan repayment. Farmers were to be given the option of repaying their loans in instalments that correspond to their production cycle: two or three instalments in autumn for vegetable and vine growers, but monthly repayments for milk producers.
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