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External finance for rural development: a synthesis of country perspectives

Research reports

Written by Annalisa Prizzon, Yunnan Chen, Maria Ana Jalles d'Orey

Hero image description: Machine operators at the Bhattarai Masala factory in Surkhet in Western Nepal Image credit:Sanjit Das/Panos for IFAD Image license:CC

Many governments in low- and middle-income countries see improving rural development as a way to achieve critical national development objectives: economic transformation, eradication of poverty and greater equality.

A lack of finance, however, constrains the full implementation of national public policies for rural development. Access to external finance also evolves as countries move up the economic ladder, shifting away from grants towards more expensive loans. A looming debt crisis for many economies will curtail borrowing options. All of these challenges have been exacerbated by the crisis prompted by the Covid-19 pandemic.

This synthesis report examines whether and to what extent governments will continue to demand external development assistance to support inclusive and sustainable rural development and, if so, its terms and conditions. We analyse 20 countries in depth.

In a nutshell, across the income per capita spectrum, our interviewees expect public finance to remain critical but they will continue to seek external assistance for agriculture and rural development, prioritising grants and highly concessional loans.

Machine operators at the Bhattarai Masala factory in Surkhet in Western Nepal
Image credit:Sanjit Das/Panos for IFAD ~ Image license:CC
Annalisa Prizzon, Yunnan Chen, Maria Ana Jalles d'Orey, Hetty Kovach and Javier Pereira

Country case study: Kenya. Published online: 23 December 2020. Corrected online: 6 January 2021. In the key messages, the sentence ‘Limited non-concessional finance to date for the sector is used to fund high-visibility infrastructure projects’ was changed to ‘There has been limited non-concessional finance for the sector to date.’

Country case study: Comoros. Published online: 23 December 2020. Corrected online: 22 January 2021. In the list of interviewees, Ali Mohamed Nobataine’s institution was changed from ‘IFAD’ to ‘PREFER Project, Ministère de l’Agriculture, de la Pêche et de l’Environnement’.