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IFAD's Opening Remarks at the RUFBEP Workshop, Beijing, 23/03/2018

Opening remarks by the IFAD Country Director and Representative for China & Mongolia at the "Documenting Global Best Practices on Sustainable Models of Pro-Poor Rural Financial Services in Developing Countries" Dissemination Workshop - Beijing, 28 March 2018

  • Honourable Mr Lun Shanjun, Chairman of Huainan-tong-shang Rural Commercial Bank,
  • Honourable Mr G. R. Chintala, Chief General Manager of NABARD India,
  • Dr Prasun Kumar Das, Secretary General of APRACA, the Asia-Pacific Rural and Agricultural Credit Association,
  • Excellencies,
  • Esteemed colleagues,
  • Ladies and gentlemen,

Ni Hao/ Good morning

  • On behalf of the International Fund for Agricultural Development, IFAD, I would like to welcome you to this workshop on "Documenting Regional Best Practices in Rural Finance", co-hosted by IFAD, Huainan-tong-shang Rural Commercial Bank, and the Asia-Pacific Rural and Agricultural Credit Association (APRACA).
  • Let me start by sharing the story that led to this workshop.
  • It was 2013.  During a visit of the IFAD Director for Asia, the National Development and Reform Commission in China, NDRC, asked IFAD to help the Government in identifying effective models and approaches to expand the access of financial services in rural areas, and particularly to more vulnerable segments of society -- looking at good practices both in China and in other countries.


  • Why was the Government of China interested in such topic?
  • Improving access to financial services in rural areas has consistently been one of the priority areas identified in the past Number 1 Documents - the first major policy document released by the Central Committee of the Communist Party each year.
  • The Government of China committed to eradicate extreme poverty in rural areas by 2020. China had made impressive progress in reducing rural poverty since the early 80s, when more than 800 million people or almost 90% of the rural population were living in poverty. However, there were (in 2013), and still there are (today) several dozens of millions of people living in poverty.
  • A large part of the population in China still live in rural areas and is engaged in the agriculture sector. Considering that the majority of the poor are concentrated in rural areas and are dependent on agriculture, agriculture growth and the economic development of rural areas remain central to pursue and poverty reduction.
  • During the 19th National Congress of the China's Communist Party in October last year, President Xi Jinping coined the concept of "rural revitalization" - that is to say: pursuing the development of rural areas addressing issues related to the modernization of agriculture, rural employment generation, food security, and environmental protection. He pledged to pursue a strategy to achieve a revitalization of the rural areas in the next 30 years
  • Moving the remaining poor out of the poverty is a challenge, as the closer you get to the target, the higher the costs and the efforts required.
  • Similarly, to develop rural areas and pursue the concept of rural revitalization and agricultural modernization, China would need to continue and further the processes of structural and rural transformation it has undergone for the past decades.


  • What could help addressing the challenges to move the remaining poor out of poverty and pursuing rural transformation? What opportunities, what untapped potential does exist in rural areas to accelerate the pace of poverty reduction and develop the rural areas in China?
  • It is estimated that less than 10% of poor rural households have access to the most basic financial services: access to credit, transfer payments, saving.
  • Similarly, most of the micro- and small-agro-enterprises, which could potentially play an important role move poor smallholder farmers out of poverty and develop rural areas, have equal limited access to financial services because of the riskiness of their business and lack of collaterals.
  • There is thus an untapped potential to boost poverty reduction efforts and promote the development and the revitalization of rural areas. This can be pursued by promoting access to rural finance services in rural areas, particularly to those segments of society and those commercial entities that at the moment have limited access to financial services: the poor and the micro- and small-agro-enterprises.
  • There is a robust evidence that promoting access to inclusive financial services has a positive impact on the income and livelihoods of the households and is positively correlated to economic development.
  • However, although good progress has been achieved during the past two/three decades in allowing better access of rural people to microfinance, credit and other short-term finance, there remains a huge gap between supply and demand of medium and long-term financing to smallholder farmers and rural micro- and small-agro-enterprises.
  • The frontier of medium-to-longer term finance, particularly for small- and micro-agro-enterprises is a critical niche to improve the productivity of these agro-enterprises, which will in turn generate employment opportunities, and eventually ensure inclusive development and transformation in rural areas.
  • The potential of inclusive finance to boost poverty reduction and rural development is thus the rationale for the interest of the Government of China in effective models and approaches to expand the access of financial services in rural areas -- and the background to their request to IFAD.


  • Why was then IFAD approached to deliver such task?
  • IFAD is one of the world's largest lenders in rural finance for poverty reduction. Since 1978, when IFAD was established, IFAD has invested over 3 billion US dollars in rural finance initiatives in more than 70 countries: from the more traditional lending and saving, to a wide range of financial products and services, including value-chain financing, agricultural risk management, insurance, and remittances.
  • In 2017, investments in rural finance or financial inclusion services accounted for about one-sixth of our portfolio, or 1.1 billion US dollars, supporting retail funding, human and institutional capacity building, and enabling policy and regulation.


  • To respond to the request of the Government of China, IFAD and APRACA, the Asia and Pacific Rural Agricultural Credit Association, have partnered in this project -- whose results will be presented today.
  • The project identified best practices in rural finance in five pilot countries in the Asia Region (China, India, Indonesia, the Philippines and Thailand), and tested their effectiveness and potential for replication.
  • This workshop will share the results of the project, presenting and discussing the identified best practices, highlighting their impact, challenges for wide replication, and policy implications.


  • In concluding my remarks and welcoming you to this workshop, let me share what I consider the challenge and the opportunity of this project.
  • First, the challenge. This project has certainly contributed to analyse and document effective models and approaches in rural finance - contributing to identifying regional best practices. It has in addition certainly generated a valuable set of knowledge - particularly with regard to cash-flow based lending, agricultural value chain finance, and the role of e-platforms in value-chain financing.
  • However, how the knowledge generated by this project will be used and capitalized by the various Governments, financial institutions, or development organizations is beyond the scope of this project. This workshop would certainly contribute to share the knowledge of the results of this project, but how the knowledge generated and captured by this project will be used is our individual responsibility.
  • Second, the opportunity. When NDRC requested for international best practices on rural finance, it did not use the term "South-South Cooperation", but – as a matter of fact – what the project did was promoting South-South Knowledge Cooperation.
  • There is an enormous opportunity to capitalize on the network that has been created through this project and to continue "South-South" knowledge cooperation on this topic.


  • In this regard, I certainly welcome the recent opportunity for APRACA to establish a Knowledge Center on Rural Finance within the Agricultural Development Bank of China in Beijing. This offers an immediate and concrete opportunity for APRACA and IFAD to continue partnering in China and in the region, working together on sharing rural finance innovations through south-south technical cooperation.


  • I thank you for your attention, and wish you a fruitful workshop. 

Xie Xie. 

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