1. Presentation by Francois Stepman CAAST-Net workshop in Arusha, Tanzania 26 October 2012

2. “The growing global demand for
agricultural innovation makes it vital
to assess the characteristics that
separate effective from ineffective
innovation fund mechanisms”
DESIGNING AND IMPLEMENTING
AGRICULTURAL INNOVATION FUNDS:
Lessons from Competitive Research and Matching Grant Projects
© 2010 The International Bank for Reconstruction and
Development/ The World Bank

3. What went wrong with
funding agricultural research for development?

4.  The absence of well-elaborated national policy,
over-compensated by an excess of donor initiatives
 The unrealistic time frame of donor initiated-
development goals
 The frequent ‘adjustments’ according to the donors’
own priorities and the methods and procedures in
fashion
 Donors and their aid administrators have short
memories, repeating the same mistakes

5.  Too many disorganized, uncoordinated and
technically weak actors at all levels, resulting
in a multitude of fragmented, competing,
contradicting, parallel activities which have
often interfered with the development of
national institutional capacities by enticing
the best people to come and work for them
 Low enabling environment for private
investments and for farmers to re-invest in
their farms

6. How to finance innovation in
groundnut?

7. As agriculture and agribusiness modernize with
increased integration and interdependent
relationships, the opportunity and the need for value
chain finance becomes increasingly relevant
It can improve the overall effectiveness of those
providing and requiring agricultural financing.
It can improve the quality and efficiency of financing
agricultural chains

8.  Meeting the challenges of consumer trends and the
demand for more processed or value added
products requires increased investment in
equipment, working capital, and skills and
knowledge.
 Such investment is not only costly for individual
value chain businesses, but can only be undertaken
if there is an assurance from elsewhere in the chain
for supplies, produce or markets.

9.  identifying financing needs for strengthening the
chain;
 tailoring financial products to fit the needs of the
participants in the chain;
 reducing financial transaction costs through direct
discount repayments and delivery of financial
services;
 using value chain linkages and knowledge of the
chain to mitigate risks of the chain and its partners.

10. Agricultural Value Chain Finance Tools
and Lessons
Calvin Miller and Linda Jones
Published by FAO and Practical Action
Publishing 2010
195 pages
• What is value chain finance, how is it applied and
what can it offer to strengthen agricultural
development?
• How can financial systems, governments and
services be prepared for the demands of financing
modern agri-food chains?
• How does agricultural value chain financing affect
inclusion, especially for small producers and what
can be done to make these systems more
inclusive?
• What can governmental and non-governmental
(NGO) agencies do to support increased and more
effective agricultural financing through value
chains?

11. Value chain financing
Donors support more and more Farmer
organisations
Private business development
National research calls
Value chain based funding

12.  Most businesses focus on managing their
operations.They are not necessarily focused on how
to improve their competitiveness through
innovation?
 Many businesses have limited ability to develop
good proposals. Developing concept notes and
grant proposals and assembling the required
documentation entails transaction costs (time,
resources).The private agri-sector may find it very
difficult (or reluctant) to provide time and cash to
match the grant?

13.  Limited experience and mistrust make the private
sector reluctant to engage with NGOs or
government-“driven” research activities and
thereby prevent actors outside the private sector
from entering into collaborative arrangements?
 Besides, the challenges of working with
smallholders in outgrower schemes limits the
private sector’s interest in submitting proposals