Credit Guarantee Systems - FAO 2013

Credit guarantee systems for agriculture and rural enterprise development.

Food and Agriculture Organization of the United Nations. Rome, 2013.

Guarantee funds have been used in many countries as a way to increase the flow of funds into targeted sectors and groups.  Guarantee funds have a cost, which is paid through the fees charged and/or subsidized by the government or a donor. Questions arise regarding the cost versus the benefits when a subsidy is needed. What is the value added of guarantee funds in reducing interest rates or the risks to lending, and how much do the funds influence lenders decision-making regarding whether or not to lend? Guarantee funds have more frequently been used for small enterprise loans in diverse sectors, but they are now quite common in agriculture and agribusiness. There is renewed interest in using them to increase investment into the sector and to ensure that investment is directed towards target groups and agro-industries that are deemed too risky for adequate financing without such risk-sharing incentives. This document takes a fresh and unbiased look at the application and results of guarantee funds for agricultural and rural enterprise development. It builds upon four case studies of guarantee funds and 12 other analyses of such funds. 

ISBN 978-92-5-107412-1