Central Europe (CEU) Agriculture Finance Digital Platform

The Central Europe (CEU) Agriculture Finance Digital Platform project aims to de-risk agri-finance, reduce transaction costs associated with agricultural lending, increase financial institutions’ participation in the sector, and enhance outreach to under-banked farmers and agri-business micro, small and medium enterprises (MSMEs). This project is working in seven Central European countries: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia, and Ukraine.

MSME agriculture is a major driver of job creation and growth in the rural economies of these seven countries. Agriculture sector growth is hampered by small farm size, lack of scale production and distribution, and lack of production modernization, which results in low productivity in agricultural production. Lack of access to finance is the main obstacle for agriculture growth in the region, influenced by high-risk perception of financial institutions to the sector. It is estimated that financial institutions cover 15 percent of the agricultural sector’s working capital needs. Innovative digital solutions, such as cash flow-based lending and alternative collateral instruments, provide an effective solution to increase competitiveness and bankability of agricultural producers.

As a part of this project, the digital agriculture finance platform is addressing information asymmetry between lenders and small farmers by consolidating finance, climate, pricing, and other information based on digital data. In addition, focusing on climate-smart agriculture lending will increase the resilience of local farmers to the effects of climate change, thus stabilizing the production and profitability of farmers. Increased and stable incomes will also reduce financing risks for financial institutions. The project aims to facilitate access to at least $100 million of finance through loans disbursed to agri-MSME and farmers in the market.