Transforming agricultural finance in ASEAN: CGIAR Innovations in private sector investment and sustainable financing

The ASEAN-CGIAR Regional Program has been at the forefront of driving sustainable development in the Southeast Asian region through its innovative approaches to agriculture and finance. In particular, the program’s IP6, has yielded significant outputs that are reshaping how financial institutions (FIs) in the ASEAN region engage with agriculture, addressing financial, productivity, environmental, and social risks and impacts.

Comprehensive Assessment System for Smallholder Farmers

One notable achievement is the development and successful testing of a comprehensive assessment system, particularly in collaboration with Landbank in the Philippines. The ASEAN-CGIAR Regional Program, in collaboration with Landbank in the Philippines, has developed a pioneering system tailored for FIs to assess the risks and impacts associated with loans for smallholder farmers. This system leverages CGIAR science and data to provide a holistic view of the financial, agricultural productivity, environmental, and social dimensions of lending to smallholder farmers.

The Landbank in the Philippines has tested this system, showcasing its effectiveness in understanding the multifaceted aspects of lending to smallholder farmers. The results of this testing phase will be presented to six banks from the ASEAN region on January 26, 2024 as a basis to scale to other geographies in the ASEAN region. This marks a significant milestone in the program’s mission to foster sustainable financing practices in the agricultural sector.

Self-Assessment Due Diligence System for SMEs/Cooperatives

Recognizing the diverse landscape of agricultural enterprises, the ASEAN-CGIAR Regional Program has also developed a unique self-assessment due diligence system for Small and Medium-sized Enterprises (SMEs) and cooperatives seeking loans. This system, grounded in CGIAR science and data, goes beyond traditional financial metrics by incorporating information on collateral, adherence to good agricultural practices, and other relevant data points.

When SMEs and cooperatives register on the platform, the system prompts them to provide additional data compared to smallholder farmers. This information is then processed to generate a comprehensive risk and impact report. Financial institutions can use this report to assess the applicability of loans to these enterprises, ensuring a more nuanced understanding of the risks and potential benefits associated with their investment.

To illustrate the tangible impact of these systems, the ASEAN-CGIAR Regional Program has produced a video providing a visual walkthrough of the assessment systems in action. The video serves as a resource for both financial institutions and other stakeholders, offering a clear and concise overview of how CGIAR science and data are transforming the landscape of agricultural finance through banks in the ASEAN region.